Thank you, your article came in useful following a argument / discussion with a pro. nuclear politician about needing new nuclear projects because of the increased demand for electricity !
To some extent this decline is a great illustration of the means of production wandering off to places where primary energy is cheaper. Trade then brings the finished raw materials to the UK.
For example, in the USA, the flood of cheap natural gas from fracking combined with a lack of LNG export terminals caused a whole bunch of companies to set up / expand fertilizer plants since those are great ways to make something easily transportable & valuable from something that’s not.
If the price of natural gas in Britain is high, expect industries that use a lot of it to wander off and hence reduce demand dramatically. Same thing for electricity. For example, the manufacturing of primary aluminum consumes ridiculous amounts of electrical power, which is why so many primary Al plants are sited near hydroelectric projects.
A lot of paid-for hydro power was resold in the US West by Al manufacturing plants as they could make more money from reselling their contracted power than the Al they were producing.
Western blast furnaces cannot possibly compete for cheap primary steel with places like Hampi in India with a modern CoreEX plant, an insanely high iron content in the soil they’re feeding into the blast furnace, etc. So as long as trade is allowed, expect the markets to take advantage of trade, distortions, subsidies, quotas, etc.
Increasing prices has got a lot to do with falling electricity consumption, for sure. But as the charts I reproduce imply that's mainly connected with increasing natural gas prices. But as international LNG prices go down (with supply gluts) in the 2026-2028 period, electricity prices will go down.
I certainly hope so! And I appreciate your optimism. But... politics. With the government telling everyone that we are really at war with Russia - but don't say it out loud - I fear things may get very much worse.
Great piece - I think this is missing all the unmetered/behind the meter generation (this is just negative demand).
Payback on a solar roof used to be 8yrs, with rising prices of electricity and falling panel price, payback is about 2yrs.
We also know that by about 2050 the UK will consume about 2x the amount of electricity than we do today, met my 4x more clean generation and delivered by 2x grid capacity
Well it’s certainly true that around 1-2 per cent of electricity consumption will be behind the meter solar pv. But the figures I use (DUKES) are generation figures produced which take account of such buildings based generation. So I do not need to make any adjustments to the figures
I am not disagreeing with you - but - If you look at the rate of panel imports - I would suspect that DUKES is under reporting since there is no data capture now solar PV is not subsidised.
'In 2023, the UK was the largest destination for extra-EU exports of solar panels, with imports valued at €19.7 billion (approximately £17.2 billion). This marked a slight increase in quantity by 5% compared to the previous year, despite a 12% decrease in value due to falling prices'.
I doubt that any undercounting is that significant- Solar Media (a company) and MCS have some good records.Of course there should be a great deal more building based solar pv. At the moment buildings solar pv iis limited by the economic value of buildings consumption- a lot of pv generation isn’t behind the meter but goes to the local grid.
“You can see that the rises (and less often ) falls of electricity and gas prices seem closely related, and there is a good reason for that! That is because gas fired power plant have been the ‘marginal price’ setter for most of this period. So as gas prices rise or fall, so do electricity prices. It is fashionable for the political right to blame energy price rises on renewable energy, but then this does not fit the data as shown here. “
Except from 2015-16 onwards when it really doesn’t
The environmental subsidies/levies, such as detailed in the OBR fiscal outlook, primarily associated with renewables support and support of other generation via the capacity market to counter the inherent reliability/ undispatchability of renewables are increasing year on year, and at £12bn per annum (2024-25) are currently twice the cost of the gas burnt for electricity generation.
Factor in the extra transmission and distribution network infrastructure costs for zero fuel cost energy sources together with the actually emissions compared to the rest of the world and it’s quite obvious why the UK is rapidly in decline.
But your reference is to the wholesale price of electricity. This is not the total cost for that electricity as it doesn't take account for subsidies nor network upgrades required. Therefore your point is moot.
Since base load generation has declined due to the demolition of coal thermal plants, our reliance on wind generation (and to a far lesser extent solar PV) requires spinning CCGT turbines , which are very expensive to run on an intermittent basis, a fleet of 25gW!. We don’t produce much gas anymore so it’s all brought in , via pipe or a few LNG terminals. Basically at the whim of a few overseas producers which require currency exchange. This makes our retail kW expensive, as one of the highest in Europe. Missnamed renewables won’t effect that much, especially when like wind infrastructure they run on ‘spare parts ‘ produced from overseas too.
It doesn’t matter how much you engage in convoluted explanations, the situation is simple: more and more renewable energy being consumed means less and less natural/LNG imports
Sorry that you think this is convoluted. I think your response is simplistic. To maintain a grid, we must have power at all times. Agreed? The only way to do this with intermittent wind and solar is by having gas turbines available 24/7 for when the sun goes down and no wind (like today, now)…so add 1gW wind and you must add 1gW gas turbine ,eg for today. Hope that is easily understood and not sounding convoluted . it’s is expensive having 2 lots of generators available to supply only 1 load. whether you like it or not.
what matters is being able to deal with peak demand, not match the capacity of available wind or solar or other forms of generation for that matter. Last year the System Operator reported that peak demand was around 48 GW, so we'd need 48GW from somewhere if there was literally absolutely no wind or solar around or anything else. Gas engines, which are emerging as a big option for dealing with imbalances these days are very cheap - maybe as low as £300 per kW according to https://www.linkedin.com/pulse/gas-turbine-vs-engine-what-right-your-application-pooya-y4hzc/. Ths compares with the cost of Hinkley C of over £10,000 per kW
Peak demand is important , as you say. It’s usually around 5:30-6:30pm. This does not obviate the requirement to provide constant grid energy, on demand. Therefore any intermittent supply needs equivalent supply from elsewhere , for when it’s intermittency kicks in. Like now when demand is around 37gW….wind giving 2gW from an installed about 25, and gas taking up the slack in despatch-able supply (expensively ) at around 20gW..L.we’re bringing in about 5 (expensively) from overseas inter connectors.
The quantity of capacity that will be available to provide peak demand will cater for all eventualities. Period. That should be obvious. I am not going to answer any more arguments about this.
Thanks David. To paraphrase, you write 'increasing electricity prices [haven't had] much to do with the cost of generating electricity'. I see the point, but how closely is the cost of electricity generated from gas related to the cost of the gas, bearing in mind that the retail price of the former is about x4 the latter?
you have got to take into account that gas fired power plants are only about 50% per cent efficient and you have to add on operating costs of the power plant
What about technology advances with less energy consumption
Non Edison lights consume only a fraction of energy compared with the light bulbs of previous decades?
Thank you, your article came in useful following a argument / discussion with a pro. nuclear politician about needing new nuclear projects because of the increased demand for electricity !
We dont make anything more in this country anymore thats why energy demand is down
To some extent this decline is a great illustration of the means of production wandering off to places where primary energy is cheaper. Trade then brings the finished raw materials to the UK.
For example, in the USA, the flood of cheap natural gas from fracking combined with a lack of LNG export terminals caused a whole bunch of companies to set up / expand fertilizer plants since those are great ways to make something easily transportable & valuable from something that’s not.
If the price of natural gas in Britain is high, expect industries that use a lot of it to wander off and hence reduce demand dramatically. Same thing for electricity. For example, the manufacturing of primary aluminum consumes ridiculous amounts of electrical power, which is why so many primary Al plants are sited near hydroelectric projects.
A lot of paid-for hydro power was resold in the US West by Al manufacturing plants as they could make more money from reselling their contracted power than the Al they were producing.
Western blast furnaces cannot possibly compete for cheap primary steel with places like Hampi in India with a modern CoreEX plant, an insanely high iron content in the soil they’re feeding into the blast furnace, etc. So as long as trade is allowed, expect the markets to take advantage of trade, distortions, subsidies, quotas, etc.
Is there a fallacy of continuous growth?
It keeps getting more expensive. Economics 101.
Increasing prices has got a lot to do with falling electricity consumption, for sure. But as the charts I reproduce imply that's mainly connected with increasing natural gas prices. But as international LNG prices go down (with supply gluts) in the 2026-2028 period, electricity prices will go down.
I certainly hope so! And I appreciate your optimism. But... politics. With the government telling everyone that we are really at war with Russia - but don't say it out loud - I fear things may get very much worse.
Great piece - I think this is missing all the unmetered/behind the meter generation (this is just negative demand).
Payback on a solar roof used to be 8yrs, with rising prices of electricity and falling panel price, payback is about 2yrs.
We also know that by about 2050 the UK will consume about 2x the amount of electricity than we do today, met my 4x more clean generation and delivered by 2x grid capacity
(source TheCCC 6th Carbon Budget).
https://www.linkedin.com/in/graemecooper/
Well it’s certainly true that around 1-2 per cent of electricity consumption will be behind the meter solar pv. But the figures I use (DUKES) are generation figures produced which take account of such buildings based generation. So I do not need to make any adjustments to the figures
I am not disagreeing with you - but - If you look at the rate of panel imports - I would suspect that DUKES is under reporting since there is no data capture now solar PV is not subsidised.
'In 2023, the UK was the largest destination for extra-EU exports of solar panels, with imports valued at €19.7 billion (approximately £17.2 billion). This marked a slight increase in quantity by 5% compared to the previous year, despite a 12% decrease in value due to falling prices'.
I doubt that any undercounting is that significant- Solar Media (a company) and MCS have some good records.Of course there should be a great deal more building based solar pv. At the moment buildings solar pv iis limited by the economic value of buildings consumption- a lot of pv generation isn’t behind the meter but goes to the local grid.
“You can see that the rises (and less often ) falls of electricity and gas prices seem closely related, and there is a good reason for that! That is because gas fired power plant have been the ‘marginal price’ setter for most of this period. So as gas prices rise or fall, so do electricity prices. It is fashionable for the political right to blame energy price rises on renewable energy, but then this does not fit the data as shown here. “
Except from 2015-16 onwards when it really doesn’t
The environmental subsidies/levies, such as detailed in the OBR fiscal outlook, primarily associated with renewables support and support of other generation via the capacity market to counter the inherent reliability/ undispatchability of renewables are increasing year on year, and at £12bn per annum (2024-25) are currently twice the cost of the gas burnt for electricity generation.
Factor in the extra transmission and distribution network infrastructure costs for zero fuel cost energy sources together with the actually emissions compared to the rest of the world and it’s quite obvious why the UK is rapidly in decline.
See my post on how in different countries there is no clear relationship between the amount of wind and solar being generated and electricity prices https://davidtoke.substack.com/p/exposing-the-net-zero-sceptic-myth
But your reference is to the wholesale price of electricity. This is not the total cost for that electricity as it doesn't take account for subsidies nor network upgrades required. Therefore your point is moot.
You are incorrect. The data in the charts are taken from Government indices of consumer energy prices. They do reflect the 'total cost' to consumers. See the series published at https://www.gov.uk/government/statistical-data-sets/monthly-domestic-energy-price-stastics
Since base load generation has declined due to the demolition of coal thermal plants, our reliance on wind generation (and to a far lesser extent solar PV) requires spinning CCGT turbines , which are very expensive to run on an intermittent basis, a fleet of 25gW!. We don’t produce much gas anymore so it’s all brought in , via pipe or a few LNG terminals. Basically at the whim of a few overseas producers which require currency exchange. This makes our retail kW expensive, as one of the highest in Europe. Missnamed renewables won’t effect that much, especially when like wind infrastructure they run on ‘spare parts ‘ produced from overseas too.
It doesn’t matter how much you engage in convoluted explanations, the situation is simple: more and more renewable energy being consumed means less and less natural/LNG imports
Sorry that you think this is convoluted. I think your response is simplistic. To maintain a grid, we must have power at all times. Agreed? The only way to do this with intermittent wind and solar is by having gas turbines available 24/7 for when the sun goes down and no wind (like today, now)…so add 1gW wind and you must add 1gW gas turbine ,eg for today. Hope that is easily understood and not sounding convoluted . it’s is expensive having 2 lots of generators available to supply only 1 load. whether you like it or not.
what matters is being able to deal with peak demand, not match the capacity of available wind or solar or other forms of generation for that matter. Last year the System Operator reported that peak demand was around 48 GW, so we'd need 48GW from somewhere if there was literally absolutely no wind or solar around or anything else. Gas engines, which are emerging as a big option for dealing with imbalances these days are very cheap - maybe as low as £300 per kW according to https://www.linkedin.com/pulse/gas-turbine-vs-engine-what-right-your-application-pooya-y4hzc/. Ths compares with the cost of Hinkley C of over £10,000 per kW
Peak demand is important , as you say. It’s usually around 5:30-6:30pm. This does not obviate the requirement to provide constant grid energy, on demand. Therefore any intermittent supply needs equivalent supply from elsewhere , for when it’s intermittency kicks in. Like now when demand is around 37gW….wind giving 2gW from an installed about 25, and gas taking up the slack in despatch-able supply (expensively ) at around 20gW..L.we’re bringing in about 5 (expensively) from overseas inter connectors.
http://www.gridwatch.templar.co.uk
If you have one car, you will drive cheaper than next door who has two cars…
One reliable and costly , and the other one only working intermittently but cheaper to run. Two lots of MOTs for example. Tyres etc..
This is one of the reasons we have pricey consumer electricity. Importing gas AND sunk costs of wind, plus maintenance of both generator fleets.
The quantity of capacity that will be available to provide peak demand will cater for all eventualities. Period. That should be obvious. I am not going to answer any more arguments about this.
Don't waste your time. This guy doesn't think baseload is important...
I'm just glad he's not in charge of the electricity distribution network.....
Thanks David. To paraphrase, you write 'increasing electricity prices [haven't had] much to do with the cost of generating electricity'. I see the point, but how closely is the cost of electricity generated from gas related to the cost of the gas, bearing in mind that the retail price of the former is about x4 the latter?
Philip
you have got to take into account that gas fired power plants are only about 50% per cent efficient and you have to add on operating costs of the power plant
Latest figures show that wind farms are only 40% efficient. So, somehow they are a better bet. 🤷🏼
But for wind/solar the fuel is free so their efficiency is almost irrelevant.