21 Comments

Dear Philip, I can understand people thinking that data centres want to be next to big energy generators given all the publicity about this topic, but really this is a lot of hype generated by some tech tycoons for their own political reasons, in my estimation. In reality data centres locate themselves for a range of other factors. About half of them in other UK are in London for example. There's been far too much hype about data centres in general really, something which I have discussed in a previous post. See 'How data centres will cut carbon emissions, not increase them' https://davidtoke.substack.com/p/how-data-centres-will-cut-carbon

Expand full comment

My blog post attempts to explain how locational pricing will discourage wind development in the windy areas Indeed locational pricing will make it the opposite of what you say, ie make wind development only possible in less windy areas where it is much more difficult to get planning consent. I don't know that a lot of energy -intensive industries will welcome being forced to move north, but the effect on renewable energy is going to be very negative, that's the key point

Expand full comment

Whilst I get your point that the gas would have had to run anyhow without wind the actually reality is wind self despatches onto a know congested grid network and knows full well it will be constrained off. Then with have the CCGTs sitting in the wings often cold knowing full well they will be needed but setting their price very high as a result. If they were on the system running at an economical output their price would be a lot lower so i don't agree that you can disregard the cost gas in the constraints equation.

Anyhow this is on OFEGM and the catastrophic connect & manage policy along with there deliberate stalling of investment in the Eastern Green links for nearly decade. They've now approve two links and they will help in FIVE years but by then there will be even more wind in Scotland so we will be back to square one.

Im a lukewarmer on NZ not totally against it as a goal but its madness chasing the 2030 goal it will cost us a fortune and will benefit foreign companies mainly as we have limited manufacturing capability left in the UK. What we need is CEGB MkII coordinating generation and transmission so we get no more constraint costs along with a minimum of 50% UK content for anything that involves subsidies or payment by consumers. Yes that will push us beyond 2030 but at least UK populous will benefit and the costs will be more imaginable.

Expand full comment

Regardless of how much the CCGTs may be 'sitting in the wings' waiting to charge high prices when wind is constrained, the point is that they'd also be sitting in the wings waiting to charge high prices even more if a lot of the Scottish windfarms didn't exist in the first place.

Expand full comment

Not sure thats the case as we have a situation here where suppliers have agreed prices on forward contracts mainly PPAs with their windfarms which if the windfarms weren't there the CCGTs would be competing for those supply contracts at lower prices as the generators would have longer term supply contracts.

Anyhow the underlying issue is that wind power is being wasted on a grand scale now over 110GWh on one day last week and this is firmly at the door of OFGEM who have utterly failed their mandate to look after consumer by stalling on grid expansion. At least that is now recognised but I would still rather see tighter coordination between generation and transmission in future.

Expand full comment

Lower prices for CCGTs compared to windfarms? Not recently, especially in 2022-23. Regardless of such arguments there would be much less renewable energy. This may be a lower priority for you, but not for me.

Expand full comment

My priority is that when the wind blows the output of the windfarms should be absorbable by the grid and not thrown away in favour of gas so I'd say we are on the same page. We may depart in that i see no point building more renewable generation if the transmission system reinforcement doesn't go hand in hand with that expansion. Clean Power 2030 recognises the need to fix planning and consenting but its words not deeds and if there is a climate emergency (im agnostic) then they need to act now to get transmission built at pace not pussyfooting around.

Expand full comment

The real solution is to stop building intermittent power sources in locations that don't have the capacity to absorb their peak output.

The concept of attracting data centres to Scotland to use surplus power from windmills makes no sense at all. Data centres need a continuous supply of reliable power 24/365.

Expand full comment

Thanks for your thoughts on this. However I don't think it is necessary to stop connecting power sources to some locations do not have the capacity to absorb their peak output. That is because the provision of batteries and/or better electricity network connections will mean all the output can be utilised usefully. As I suggest in the blog post better regulation and incentives can achieve these objectives

Expand full comment

But surely storage and better connections just add cost? And in the case of onshore connections, delay and consenting risk, as well as diminishing natural capital

Expand full comment

Everywhere on the grid has reliable power 24/365, but the closer those places are to wind farms, the shorter the big wires need to be

Whether there are in Scotland or SE England they will be supplied by Scottish wind farms

Expand full comment

David is quite right

Expand full comment

If I remember the high upfront cost of nuclear or renewables essentially requires govt. / state taking the risk out of the borrowing to allow long term energy security and accrue any financial return. All the energy sources require infrastructure, maintenance and/or extension of large scale retail distribution. (Gas is going to require tricky decisions as much as electricity?)

Just a thought: high end electricity users like data centres prefer to sit next to an entirely dependable / dispatchable source with first call on say hydro, and some seem to be taking bets on expensive future sources like small module nuclear. Is the aluminium plant still working next to the hydro at Fort William?

When the wind goes down, Scotland requires dependable infra structure to despatch in the opposite direction, whatever any arrangements new high end industry might make?

Expand full comment

Constraint payments will always be required whether there is regional pricing or not

Expand full comment

indeed, so the advertised claimed advantage (to locational pricing) of getting rid of constraint payments is bogus. I talk about this issue in the post

Expand full comment

It wouldn’t get rid of constraint payments but should reduce them (as there would be less constraining)

As someone living in a renewables rich area, but accepting that we have to host all the infrastructure on behalf of the south east of England, locational pricing would give me cheaper bills, and make London pay their fair share. Electricity should be more expensive there as it costs more to get it there

Locational pricing is also going to be used, according to recent correspondence with DESNZ, to site nuclear stations in illogical places

Expand full comment

Thats the point of the Transmission Use of System charges the further the power has to come the more it cost us in SE already. This is the reason why imports are increasing so much as its cheaper to import now than transmit it all the way from Scotland.

Expand full comment

Having interconnectors are useful, I agree, but they are not a replacement for domestic production - otherwise our greatly increased demand for imports will push up import prices themselves by a lot

Expand full comment

Surely locational pricing will encourage new investment in the renewables rich areas, so eg data centres in Scotland, rather than encourage wind farms be built in poor wind areas (which would be ridiculous). This way less transmission infrastructure is needed and everyone benefits. Also the communities in Scotland who have to suffer onshore wind get cheaper bills, rather than, as current, paying to send electricity to London

Expand full comment

My blog post attempts to explain how locational pricing will discourage wind development in the windy areas Indeed locational pricing will make it the opposite of what you say, ie make wind development only possible in less windy areas where it is much more difficult to get planning consent. I don't know that a lot of energy -intensive industries will welcome being forced to move north, but the effect on renewable energy is going to be very negative, that's the key point

Expand full comment

Industry will not be forced to move anywhere, but normal commercial considerations would encourage them to move.

This has always happened, with eg aluminium smelting locating near nuclear or hydro generation. The alternative is industry locates randomly around the country and transmission capacity has to be added to get the power to them, increasing the overall system cost

Expand full comment