Green energy costs are too high to make green energy systems work

Electricity is too expensive to make heat pumps worthwhile, MPs have warned, as they urged the government to rethink environmental costs passed onto customers.

46 thoughts on “Green energy costs are too high to make green energy systems work”

  1. Modern heat-pumps may shift up to 4 times as much heat (supplied by electricity) as they use to work, so it’s silly season nonsense.

  2. In the good old days of 12 years or so ago, the per unit price of electricity was about 4x the per unit price of gas. The reason for the differential was that a gas fired power station had to burn 4 units of gas to deliver 1 unit of electricity to your home and mine. So, at those prices, electricity to power a heat pump appeared to be a break even deal relative to gas. However, the capital cost of heat pump installations was much higher than the cost of gas boilers.

    In my most recent energy bill (early December 2020) the per unit price of electricity is 5.5x the per unit price of gas. So I don’t think its the MPs being silly.

  3. Right, heat pumps work relatively efficiently for an electrical appliance, but creating and delivering electricity to a heat pump is far less efficient than delivering gas directly to a boiler.

  4. @ EdP
    Currently, and most of the time every winter, we are burning coal to produce electricity so the inefficiency of the marginal producer, combined with transmission losses means that an electrical heat pump needs to be *more than* 4 to 1 just to break even on energy use. As coal produces more than twice as much greenhouse gas as a gas boiler it is very, very, ungreen to install heat pumps.
    Heat pumps will, someday, be a good idea when we have built pumped-storage reservoirs in all the available sites in the UK and someone has invented a better storage battery for surplus wind energy when the wind’s blowing and someone else has found a way to store H2 without any risk of explosion to provide fuel to new electric cars and … – but Europe will still rely on Norway to prevent power cuts unless we have enough Nuclear base load.

  5. “We’re all for saving the planet. As long as it doesn’t cost too much.”

    The idea that “heat pumps are better” misses the plot. Heat pumps still use electricity. They won’t get you to Net Zero. Half-measures won’t save the planet. So ban home heating.

    Dammit, people, this is a ‘mergency.

  6. Gamecock: Since I live in Queensland, I’ve no objection to banning home heating. But under no circumstances can home air conditioning be banned.

  7. Bloke in West London

    @Boganboy: I’m living in the UK because even with air conditioning Queensland’s fucking unbearable.

  8. A heat pump is an air conditioner run backwards.

    This little drama about the cost of heat pumps is a prelude to the vast problems Net Zero portends. As you approach 2050, it won’t be about cost, but about how many will die.

    If you are still a country.

  9. Bloke in West London

    @john77: I thought that all of the appropriate places for pumped-storage where already in use? Happy to find out if I’m wrong.

  10. ‘As you approach 2050, it won’t be about cost, but about how many will die.’

    Yes, Gamecock. We should imitate the Germans and build plenty of coal burning power stations. After all, if the Chinese won’t buy our coal, we might as well burn it ourselves.

  11. I’ve just tried to watch the carols from King’s. Unspeakably bloody dismal. We’re going to hell on a handcart. Heat pumpology is just a symptom of a general sickness.

  12. to get anywhere near a co-efficiency of performance of 4 you need underfloor heating, a U-Value of 0.17 and airtightness, even then in high usage periods or cold days the COP can reduce to 1. They work well in off grid locations – better than oil (though that has come down in price). No good at all for a retrofit in our uninsulated housing stock.

  13. @ Bloke in West London
    The tome that I read from a Cambridge University professor (so probably brighter than I as well as more knowledgeable on the subject) said that there were 13 decent sites in the UK for pumped storage and currently we are only using four of them. They probable accounts for more than half of the potential *natural* storage capacity but it certainly isn’t 100% – the remainder is less economically attractive but that will change when they ban fossil fuels: even a ban on coal will move some of them into being economic.

  14. @ Boganboy
    The old brown coal fired power stations in Germany were thanks to the Communists, the new ones are thanks to the Greens. Even my local Green Party activist admits that the German Greemns got it wrong on banning nuclear power and replacing it with coal (the dirtiest form of coal, just to make it worse).

  15. the remainder is less economically attractive but that will change when they ban fossil fuels: even a ban on coal will move some of them into being economic.

    Perfectly sums up the madness we are living through, things becoming “economic” because we ban the cheaper and more reliable alternatives to solve a non-existent problem.

  16. Each to their own, BiWL, but we’re more than happy in Queensland, certainly wouldn’t trade our mansion overlooking the southern Whitsunday Islands for anywhere close to West London (or North, East or South).

    We had an unbearable Christmas Eve dinner for 9 last night and have had numerous unbearable festive functions for up to 40 people in December.

  17. Alan: to paraphrase our host: what uninsulated housing stock? We’ve had 40 years of insulating existing stock and building new stock prefitted with insulation, to a good approximation there’s nothing left. What is left is stuff like castles and 500-year-old crofters huts.

    In my 120-year-old industrial terrace house with 18″ stone walls it stays toasty warm with bearly any heat as long as I keep the door closed. The main source of heat loss in most properties is the holes people put in the walls – otherwise known as doors.

  18. Bloke in North Dorset

    SURPLUS ?!?! LOL. You are going to die from lack of electricity.

    There’s hope, Extinction Rebellion organiser Zion Lights now campaigns for nuclear power.

    Although on 2nd thoughts, having someone called Zion Lights on your side might not be the advantage it seems.

  19. Heat pumps work well in NZ. Most of the country isn’t so cold we need boilers. Most is hot enough in summer that the ability to cool is useful. They fill a nice in between spot.

    They don’t work well in our south because they ice up in winter. So you then have to heat the ice to remove it. Spoiling their efficiency.

    The UK is like our south. Not warm enough to need air-con. Too cold for heat pumps to be efficient.

    Boilers make way more sense.

  20. Sounds familiar:
    Stay at home and die from non-covid related diseases to “save the NHS”.

    Stay at home and freeze to death due to lack of electricity to “save the planet”.

    Madness.

  21. @ Gamecock
    On this east side of the big pond the variability of aggregate wind-power is over 140:1 (individual windfarms are 10:0, I am talking about *total* supply to the grid), so when the Mekon supporters want wind to supply half (as a starter) total energy they need to build enough windfarms to produce >10x maximum usage. When the wind is blowing there will be surplus supply.

  22. That won’t support a modern economy, John77. Only a modern economy can afford the decadence of wind power. You are absolutely, positively screwed, blued, and tattooed.

  23. @ Gamecock
    “Afford” is talking in money terms. They think the magic money tree means that we can afford anything.
    Windpower is not blocked by money but by it just not working when we need it.
    The UK can actually afford to build a thousand windfarms and another thousand solar farms but there would still be brown-outs in January most years so those of us who remember December 1973 will be wearing thick woollies and doing press-ups, or jogging, to keep warm. Fortunately when it’s cold enough for a brown-out to cut off the power to refrigerators it’s also cold enough for the food in the frige not to go “off”.
    If watermelons (“green on the outside, red on the inside”) gain power we’re screwed anyhow, long before we get to brown-outs.

  24. Dinorwig – the biggest pumped storage site in the UK, if not the world – can deliver 1.7GW for just over 5 hours, for a total capacity of 9.1GWh. It’s there to smooth the electricity supply (as used to be said, when it was half-time in the cup final and every household switched the kettle on). Current grid capacity is ~30GW (we’ll need a lot more when all heating and vehicles are electric in 2035*), so to cope with four consecutive cold, still days in February would need at least 300 such plants.

    BTW the world’s biggest battery power station (in S Australia) is 0.1GWh, though there are plans to double its size, I read.

    * (joke)

  25. What Chris said, except that it’s been January when we’ve had three cold, still, days in succession in most recent years. The planned interconnector from Norway will help but Norway is committed to helping out Denmark (smaller than us but more committed to unreliable wind) so can only do a little to help us in brown-outs. Cold still days in January are usually clear but Solar peaked at 5% of demand today, so 1-2% averaged over 24 hours and will be similar on such winter days.

  26. Sorry, John, you will never get there. There is no path to it.

    As wind power achieves more penetration, >30% in my estimate, coal/gas generators will not be able to cover their fixed costs, and go offline. The system collapses at 40% penetration. Not enough wind; no coal/gas backup.

    “The UK can actually afford to build a thousand windfarms and another thousand solar farms”

    Nope. Your economy collapses way before that. And you won’t be able to afford food.

  27. @ Gamecock
    The economy does not collapse – four or five million people, mostly Old Age Pensioners die of cold. The reduction in the cost of supporting non-workers permits the survivors to continue with an eastern european standard of living.
    FYI we have occasional days when wind provides 30% of non-nuclear electricity. It is, of course, more expensive than gas and has to be subsidised, even despite the set-up which says that the grid will accept all wind-power produced and gas has to switch on and off whenever in order to accommodate this. Incidentally most of the fixed costs for *any* power station are in the building of it (especially safety) so it’s only when the price paid by the grid falls below variable costs that they have to go off-line..

  28. @ Gamecock
    *You* are being silly. Once the turbine is installed the initial cost is sunk and has NIL bearing on the question as to whether to run it or not.

  29. decnine
    December 24, 2020 at 4:03 pm

    In the good old days of 12 years or so ago, the per unit price of electricity was about 4x the per unit price of gas. The reason for the differential was that a gas fired power station had to burn 4 units of gas to deliver 1 unit of electricity to your home and mine. So, at those prices, electricity to power a heat pump appeared to be a break even deal relative to gas. However, the capital cost of heat pump installations was much higher than the cost of gas boilers.

    In my most recent energy bill (early December 2020) the per unit price of electricity is 5.5x the per unit price of gas. So I don’t think its the MPs being silly.

    No, he still is. If the price of electricity being too high is making heat pumps uneconomical – that means its *cheaper* to burn that natural gas in a boiler vice burning it individually in boilers across the country.

    Ie, you’re using fewer resources to get the heat.

    Fewer resources means fewer emissions.

  30. So Much For Subtlety

    John77 December 25, 2020 at 8:18 pm – “Incidentally most of the fixed costs for *any* power station are in the building of it (especially safety) so it’s only when the price paid by the grid falls below variable costs that they have to go off-line..”

    That depends on the type of generator it is. If I remember right, the costs of building nuclear reactors are huge and hydro even more so. But the cost of running them is low – next to zero for hydro. So the power is very cheap once they have been paid off. Most of the cost of the power going to interest paid on the initial construction costs. The cost of a natural gas plant, if I remember right, is about 50:50. They are not expensive to build and their fuel is not cheap. Coal is somewhere between gas and nuclear.

    john77 December 25, 2020 at 10:32 pm – “Once the turbine is installed the initial cost is sunk and has NIL bearing on the question as to whether to run it or not.”

    You know, there ought to be a rule about arguing interest payments and costs with an accountant, but what the hell! That is a remarkable claim there. Once a turbine is installed the owners have to pay their loan back. They have interest payments. Those does not wait for cold weather. The cost of a turbine sitting idle is not zero.

    The exception is hydro. Dinorwig was opened in 1984. It is likely that the loan has long since been paid off. The 50 oldest power stations in the US are all hydro and they have been operating since 1908 at least. The average hydro plant in the US is over 60 years old. They have no interest payments to meet (more or less turbines do wear out but the costs are small). This is why they are used for storage. They cost little to sit idle.

    So back up is usually gas where hydro is not available because a gas plant is cheap. The interest payments are not high as they do not cost much to install. The fuel is a large part of the cost of the plant so it is not too bad to have them sitting idle. They also go from zero to power generation very fast. With coal you need to have some turbine hot and spun up, but not generating power, all the time.

    But that cost is not zero. You still need to pay off your loan and very few gas turbines survive so long that their interest disappears as the loan is paid in full.

    (There was a push to design nuclear power plants more like hydro dams. You could make the cores much bigger so they would suffer less damage from neutron irradiation. More expensive to build but as the fuel is cheap, once they had paid off their loans, they could be very cheap. Why shouldn’t most of a reactor operate for over 100 years?)

  31. Well said, SMFS.

    Additionally, no one is going to let a massively expensive capital asset sit idle, even if paid for. If not used, they’ll pack it up and send it elsewhere where they can make money off of it.

  32. @ SMFS
    Interest costs do not affect the economics of choosing to run a gas turbine or leaving it sitting idle. They just don’t any more than the depreciation charge – the owner is committed to them, come what may apart from its bankruptcy, when it signs the contract. So it makes no difference to the interest payments whether the turbine is running or idling or shut down.
    BTW I am not a stupid accountant, in my youth I was an Actuary [and I could have coped with the excitement, just not with the lack of academic rigour].
    The principal reason why CCGT is the main, second-choice, back-up for the unreliables, wind and solar, is that it is the second-fastest to switch on after pumped hydro. For the UK Grid, politics comes first, followed by reliability, followed a long way behind by economics. Gas, a fuel cost, *should* affect the decision – but the accounts filed at Companies House show the cost of transmitting electricity to the grid connection onshore from the Lincolnshire offshore windfarm exceeded the sales value of the electricity and it is virtually the same to within a couple of percent for all gas-fired turbines; running Drax’s coal while some gas-fired plants are idle is not economics – it is making sure that the Grid can switch on enough CCGT when the wind drops to meet the day’s maximum demand.
    Since wind (and solar) needs to be subsidised by the impoverished consumer with a coin-in-the-slot meter, and the price guarantee that EDF wants for a new nuclear plant is even higher, we know that the overall costs of gas turbines including fuel must be significantly less than the electricity price, let alone those of wind turbines including fuel (Hydro, the preferable option is only a couple of % of electricity generated).
    Hence Gamecock’s claim that the price of power will be so low that the cost of fuel for CCGT plants will exceed the price of electricity generated thereby and they will go off-line is ludicrous.
    More later on your other comments.

  33. So Much For Subtlety

    john77 December 27, 2020 at 5:36 pm – “Interest costs do not affect the economics of choosing to run a gas turbine or leaving it sitting idle. They just don’t any more than the depreciation charge – the owner is committed to them, come what may apart from its bankruptcy, when it signs the contract. So it makes no difference to the interest payments whether the turbine is running or idling or shut down.”

    That is simply restating my point but claiming it means the opposite. If I have borrowed a billion dollars to build a gas fired power station then, yes, I have an interest bill to meet every month whether it is working or not. But that means it must work. I cannot afford to have it sit idle while my interest payments mount up. Once I am committed to the loan, I must make money to pay it off. This is precisely why hydro is the preferred option.

    “The principal reason why CCGT is the main, second-choice, back-up for the unreliables, wind and solar, is that it is the second-fastest to switch on after pumped hydro.”

    As I said.

    “we know that the overall costs of gas turbines including fuel must be significantly less than the electricity price, let alone those of wind turbines including fuel (Hydro, the preferable option is only a couple of % of electricity generated).”

    No objection from me.

  34. @ SMFS
    Gamecock said that economics will make CCGT go off-line. Economics makes CCGT go off-line IFF the price paid by the grid is less than the excess of the cost of running it over the cost of not running it. That is mostly fuel (wear and tear is relatively insignificant for CCGT, unlike windmills). The interest has to be paid whether the turbine is running or not.
    You say that you must work to pay the interest but if the price of electricity is less than the cost of fuel you are worse off running the turbine and Gamecock is right. If the price of electricity is higher than the cost of fuel then you run the turbine and have net cash to pay interest.
    Is the price of electricity less than the cost of the gas burned? NO, it isn’t because over the life of the generating plant it is greater than the cost of the plant and fuel, including interest on the construction cost. We know that because of all the fuss about guaranteed prices for new nuclear plants and Ed Millionareband’s big subsidies for wind and solar plants – the electricity generated by CCGT is priced below the break-even price for wind, solar and new nuclear – and the CCGT plants are making a profit. Construction costs are positive and so is the interest rate on loans to private sector companies. So the price of electricity cannot be below the cost of fuel for CCGT.
    Right now CCGT is producing more electricity than twenty times as much as wind and solar combined and coal is producing more power than wind and solar combined – the grid has brought on some coal because it needs a margin of CCGT on call in case the imports from Europe cut off (imports/exports are alleged to be for our benefit but seem to be to help France and Ireland balance their supply and demand).
    If economics determined grid supply we should never have had windfarms as they are not cost-effective and as for Drax burning woodchips imported from the USA!?! Solar is not competitive with CCGT this far north.
    What makes CCGT go off-line when the wind is blowing is politics.
    I do agree that Hydro is the preferred option: if only we had enough of it.

  35. Just a few facts about CCGT …
    There are substantial cost penalties for large & fast load variations. Specifically, the turbine itself is subject to thermal stress cycling and will need more maintenance than if it’s run at a relatively stable power. That maintenance may involve shutting it down, taking it apart, and welding up all the cracks in the casing. I speak of that as having been on a tour of our local plant while the casing was indeed lifted off for just that operation !
    As to economics, what will happen is that as running hours/lecky generated is reduced, the unit cost of that lecky goes up. So the GT operators get the triple whammy of being asked to do the load following which puts their maintenance costs up, while producing less lecky overall which puts their per-unit costs up, and thus end up getting less when other options work out cheaper.
    And even if you had no costs like load repayments etc to make, when shut down you still have your staff costs, rates, insurance, etc, etc, etc.

    What I believe tends to happen is that when things are looking bad, an operator will publicly announce it’s shutting down and scrapping it’s old plants. This then gets factored into the forecasts as a reduction in available capacity, and then someone somewhere effectively says “Oh bother, we’re going to have negative margin come “. So some means of paying availability charges is worked out such that the operator now gets paid to keep the plant sitting around idle so that it can be there when needed. Margin is the amount of spare generating capacity over demand – negative margin means just what it sounds like, not enough generator capacity to keep all the lights on.
    I’ve seen this in the past and vaguely recall Fiddlers Ferry (could be wrong). I noticed on BMReports that we were forecasting negative margin a few months ahead. I even emailed my MP (IIRC) to ask the relevant department why we were heading that way and still supporting windmills to make things worse. After a while the forecast changed (now positive margin forecast), and the large coal plant was announced as staying open.
    That tactic obviously only works if you a) have a very large plant, b) it’s basically at the end of it’s economic life anyway, and c) there are low (or negative) margins forecast.

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