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A good problem to have - better too much supply than too little. But I don't think it will come to that:
We have started to see overall demand increase, since 2023 (at a rate of about 500MW average demand per year). This will accelerate as the electrification-of-everything gathers pace. And of course there are the 'dreaded AI' data centres which are predicted to increase to 9% of total electricity demand by 2030.
We will also be losing the last remaining AGR nuclear stations over the next 2-3 years. That will drop average supply by around 3GW.
And we have the interconnectors which just today have swung from 6GW exported to 5GW imported, with an annual average of around 3GW imported. Continental Europe will quite easily take our excess; there will still be lots of movement between imports and exports but with a lower average net import, or perhaps a reversal to net exports.
And we will have around an extra 10GWh of batteries on line by this time next year, which will suck up the lunchtime sunshine and deploy it for dinner.
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California has huge amounts of solar, which sees prices go negative in the middle of the day on most days. There is a lot of battery deployment to shift it to later in the day when demand is higher, but they need more.
Thsi long article (too much to quote) is worth a read.
The US clean electricity transition continued as wind and solar generated more than coal for the first time. Electricity demand growth sped up and solar generation rose more quickly than gas to help meet it.
Price collapse is a phenomenon where highly coordinated intermittent generators, such as renewables in a compact geographic area, can generate enough to flood the electricity system and lead to sustained or repetitive periods of negative pricing.
This occurs regularly in California (primarily from solar) and Iowa (primarily from wind).
The problem is that, because the renewable generators tend to be correlated to each other (ie. they generate at approximately the same times), an increasingly large portion of all the electricity they produce becomes valueless. This causes the average value of their production to fall rapidly unless the price explodes to very high levels at the times when they cannot fully saturate demand. In a system without subsidies the renewable generators drive themselves from the market.
In the UK system, where fixed prices (contracts for difference) are provided to renewables, this effect leads to radically climbing system operator costs which will eventually become the dominant portion of the actual electricity price. Wholesale electricity prices will be zero or negative much of the time but actual electricity bills will be expensive.
Battery storage can, to some extent, mitigate this, but in California and Iowa it has been completely overwhelmed, and I think the same is highly likely to occur here
== Doublepost prevention - post automatically merged: ==
A good problem to have - better too much supply than too little. But I don't think it will come to that:
We have started to see overall demand increase, since 2023 (at a rate of about 500MW average demand per year). This will accelerate as the electrification-of-everything gathers pace. And of course there are the 'dreaded AI' data centres which are predicted to increase to 9% of total electricity demand by 2030.
We will also be losing the last remaining AGR nuclear stations over the next 2-3 years. That will drop average supply by around 3GW.
Without space heating, which remains stuck in the doldrums on account of electricity prices being far too high, I can't see demand growth swallowing up that much.
Even all cars being electric is only ~10GW average, and we are still a long way from that!
Of the four remaining AGR stations, two (Torness and Heysham 2) are fairly likely to make it to the opening date of Hinkley Point C, which will add 3200MW! So nuclear close out can't really be expected to save us here.
And we have the interconnectors which just today have swung from 6GW exported to 5GW imported, with an annual average of around 3GW imported. Continental Europe will quite easily take our excess; there will still be lots of movement between imports and exports but with a lower average net import, or perhaps a reversal to net exports.
Continental Europe, certainly western and central europe, is likely to see solar and wind production which is to a great extent correlated with ours.
So I don't think we can depend on them to soak up power without end.
And we have the interconnectors which just today have swung from 6GW exported to 5GW imported, with an annual average of around 3GW imported. Continental Europe will quite easily take our excess; there will still be lots of movement between imports and exports but with a lower average net import, or perhaps a reversal to net exports.
And we will have around an extra 10GWh of batteries on line by this time next year, which will suck up the lunchtime sunshine and deploy it for dinner.
On top of our batteries here, the Norwegians are expanding their pumped storage, actually repurposing it from straight HEP (e.g. Illvatyn and Blasjo,) so we can imagine the interconnectors exporting some of our surplus that way.
With gas prices rising ever higher in the run-up to winter combined with the Strait of Hormuz trouble, wholesale prices have rarely gone below £100 MWh in recent weeks (usually at weekends), however today they dipped to nearly free around 1pm, where gas generation was <1GW while solar and wind dominated.
Isn't this more a case of supply (with gas generators mostly turned off) > demand?
Batteries will presumably make the drop less pronounced as they will shift supply to more profitable periods of the day (basically avoiding that supply of renewables > demand). I would be interested to know the break even price per MWh for building a solar farm + sufficient batteries / storage
If I remember well last wind power auction was a strike price over £100/ MWh (vs in the region of £50 some years ago) - these must be getting big 'subsidy' payments through days like this (which are mostly in your bills). Let's assume that in one or two years the grid will have been sufficiently re-configured (including batteries) to get the power from Scotland to (south) England and that the required investment to do so will have been paid (again mostly through your bills).
I would think then, on periods with enough wind, sun and nuclear (aided by batteries and other storage to soak up at lest a normal level of excess generation) and assuming the various subsidies (CFD payments for example) remain in your bills and not moved to general taxation, then prices will be set probably by the higher of Contract for Difference for wind or cost to payback solar + batteries.
If that is roughly correct the person who looks forward to very cheap energy on the basis of these graphs will be sorely dissapointed!
Price collapse is a phenomenon where highly coordinated intermittent generators, such as renewables in a compact geographic area, can generate enough to flood the electricity system and lead to sustained or repetitive periods of negative pricing.
This occurs regularly in California (primarily from solar) and Iowa (primarily from wind).
The problem is that, because the renewable generators tend to be correlated to each other (ie. they generate at approximately the same times), an increasingly large portion of all the electricity they produce becomes valueless. This causes the average value of their production to fall rapidly unless the price explodes to very high levels at the times when they cannot fully saturate demand. In a system without subsidies the renewable generators drive themselves from the market.
In the UK system, where fixed prices (contracts for difference) are provided to renewables, this effect leads to radically climbing system operator costs which will eventually become the dominant portion of the actual electricity price. Wholesale electricity prices will be zero or negative much of the time but actual electricity bills will be expensive.
Battery storage can, to some extent, mitigate this, but in California and Iowa it has been completely overwhelmed, and I think the same is highly likely to occur here
== Doublepost prevention - post automatically merged: ==
Without space heating, which remains stuck in the doldrums on account of electricity prices being far too high, I can't see demand growth swallowing up that much.
Even all cars being electric is only ~10GW average, and we are still a long way from that!
Of the four remaining AGR stations, two (Torness and Heysham 2) are fairly likely to make it to the opening date of Hinkley Point C, which will add 3200MW! So nuclear close out can't really be expected to save us here.
Continental Europe, certainly western and central europe, is likely to see solar and wind production which is to a great extent correlated with ours.
So I don't think we can depend on them to soak up power without end.
If we get to a stage where the country can't soak up power without end and we end up with a surplus, would there be a possibility that electricity no longer has to be metered, and people end up paying a "subscription cost" to cover infrastructure costs ?
I say this, because I remember reading that in the early days of nuclear, there was some speculation that this might happen.
Looks like it started at 0830 BST with more coming on line in stages later.
The other 2 of those farms has never got above 50% so plenty more capacity yet to come on line.
If we get to a stage where the country can't soak up power without end and we end up with a surplus, would there be a possibility that electricity no longer has to be metered, and people end up paying a "subscription cost" to cover infrastructure costs ?
I say this, because I remember reading that in the early days of nuclear, there was some speculation that this might happen.
Yes, it would probably require a state organised system to keep operating (which to be fair, was what we had when the speculation about nuclear occurred).
On what supplier/contract?
I have a 1-hour £1/kWh exported offer from Axle tomorrow at 1930, and an Octopus 1 hour free on Sunday based on what I have exported recently...
On what supplier/contract?
I have a 1-hour £1/kWh exported offer from Axle tomorrow at 1930, and an Octopus 1 hour free on Sunday based on what I have exported recently...
Depends what you mean by breakeven price, but the levelised cost of energy (LCOE) price is probably the best comparison, as it takes into account construction, operations / maintenance costs and fuel (where appropriate).
Solar + battery comes out under £100/MWh for a typical 2 hour battery, but that has been falling rapidly.
For comparison, the LCOE of a new Gas CCGT power station operating as baseload is well over £100/MWh, while a peak unit (30% capacity) is around £150/MWh. It is not clear what wholesale gas price was used in these estimates, but I’d bet it was less than the current cost of gas which is is well north of £60MWh.
A good example of solar + battery is a project being built in Abu Dhabi (where sunshine is not in short supply), with 5.2GW solar and a 19GWh battery. That is intended to provide a baseload 1GW 24/365. Construction cost is around £5bn (compare to the construction cost of Hinkley Point C).
The last auction (Round 7 / 7a) saw offshore wind strike price at £91.20/ MWh, Onshore was £72.24, large scale solar £65.23. All these in 2024 prices.
Dogger Bank and Sofia have strike prices a shade either side of £40/MWh, but that was at 2012 prices. In reality, there’s not much difference in current prices; more recent wind projects are perhaps 20% more expensive in real terms.
Sources: I found all this data on various parts of the UK Government website, except for the Abu Dhabi prokect which was from various news reports.
On what supplier/contract?
I have a 1-hour £1/kWh exported offer from Axle tomorrow at 1930, and an Octopus 1 hour free on Sunday based on what I have exported recently...
Depends what you mean by breakeven price, but the levelised cost of energy (LCOE) price is probably the best comparison, as it takes into account construction, operations / maintenance costs and fuel (where appropriate).
Solar + battery comes out under £100/MWh for a typical 2 hour battery, but that has been falling rapidly.
A good example of solar + battery is a project being built in Abu Dhabi (where sunshine is not in short supply), with 5.2GW solar and a 19GWh battery. That is intended to provide a baseload 1GW 24/365. Construction cost is around £5bn (compare to the construction cost of Hinkley Point C).
If we compare to the nuclear station built in the UAE (Barakah) it doesn't look quite so good as using Hinkley Point C!
$32billion (relatively recently) for 5400MW. Mostly because its wasn't built using a terrible design using silly financial wheezes to hide the true cost.
If we compare to the nuclear station built in the UAE (Barakah) it doesn't look quite so good as using Hinkley Point C!
$32billion (relatively recently) for 5400MW. Mostly because its wasn't built using a terrible design using silly financial wheezes to hide the true cost.
Is there any progress on trying to decouple gas prices? We only need 3-4 GW of gas power generation at these days to have £100+ rates per MWh, even while wind and/or solar dominate.
Is there any progress on trying to decouple gas prices? We only need 3-4 GW of gas power generation at these days to have £100+ rates per MWh, even while wind and/or solar dominate.
It requires a total redesign of how the electricity market system works, and as far as I know noone has come up with a truly workable solution yet.
A major issue with models that aren't vertically integrated is that you need a price mechanism for every unit of electricity and the one we use is the most obvious one.
Is there any progress on trying to decouple gas prices? We only need 3-4 GW of gas power generation at these days to have £100+ rates per MWh, even while wind and/or solar dominate.
It requires a total redesign of how the electricity market system works, and as far as I know noone has come up with a truly workable solution yet.
A major issue with models that aren't vertically integrated is that you need a price mechanism for every unit of electricity and the one we use is the most obvious one.
I think a big part of the "plan" is an indirect duct tape solution strategy to make the problem smaller and thus more tractable the problem is that this takes time:
1) fix the grid capacity issues*, in reality it may take another 3 years before we start seeing massive changes especially on getting the power south of the Border. The problems is this might only start to deliver shortly before the next general election (which might be politically too late).
2) Have more renewable and storage schemes (in planning / construction) come on line especially south of the Humber which avoids some of the grid constraints this will have much bigger impact in the next few years
3) Battery Storage should dent the gas price impact in the evening peak as more and more comes on line
*To put a scale on this Wind Curtailment has varied between 770MW and 7,150MW so far this month and would probably allow gas usage to be at least halved overall.
Gas is going to be in short supply and very expensive this winter which is both good (incentives investment) and bad we will all end up paying for it this winter. Also we might potentially see Drax usage maximised if this is cheaper than gas?
Is there any progress on trying to decouple gas prices? We only need 3-4 GW of gas power generation at these days to have £100+ rates per MWh, even while wind and/or solar dominate.
Yes it is not uncommon for gas to be quite minor fraction, but for historic reasons effectively sets the price.
At midnight wind peaked near 20GW, but then fell all morning to just 6GW. And in the early hours, wind was major component (obviously no solar until about 6:30am whilst dark), both nuclear and biomass were each around 3GW (which has stayed virtually constant all day), and gas was around 2.5GW from midnight to nearly midday. So all morning gas was only about 10% of electricity produced.
At time of writing, gas is just 13.5% of electricity production, but price since daybreak has been £140-180 per MW due to more gas being used.
Yes it is not uncommon for gas to be quite minor fraction, but for historic reasons effectively sets the price.
At midnight wind peaked near 20GW, but then fell all morning to just 6GW. And in the early hours, wind was major component (obviously no solar until about 6:30am whilst dark), both nuclear and biomass were each around 3GW (which has stayed virtually constant all day), and gas was around 2.5GW from midnight to nearly midday. So all morning gas was only about 10% of electricity produced.
At time of writing, gas is just 13.5% of electricity production, but price since daybreak has been £140-180 per MW due to more gas being used.
Though that is the price for electricity purchased on the spot. How much of our electricity is now purchased through CfD or similar and therefore that price isn't relevant?
Though that is the price for electricity purchased on the spot. How much of our electricity is now purchased through CfD or similar and therefore that price isn't relevant?
As I understand it, strictly speaking CfD electricity is not purchased separately.
There is a behind the scenes accounting process that either makes up deficits or skims off surpluses so that the owner of the plant receives the contracted sum.
However, I would expect an awful lot of electricity is not purchased by CfD as they were only introduced in 2014. Furthermore until recently (2025) the term on the agreement was only 15 years, so we would expect to see some schemes existing them from 2029.
EDIT:
This website (energyadvicehub.co.uk) suggests that the total is about 15% of electricity is sourced from CfD contracts at present.
The government says that CfD is its “main mechanism for supporting low carbon electricity generation”. Around 15% of GB’s electricity comes from infrastructure built through the Contracts for Difference scheme. That’s around half of the power we get from generators built under the older Renewables Obligation (RO) scheme: around 30%. But the balance will shift as the older RO generators get decommissioned and CfD expands.
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