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The cost of electricity generation by gas is …

Comment posted Wind energy may be controversial but the logistics and the skills are mesmeric by HansBlix.

The cost of electricity generation by gas is currently uncompetitive compared to coal (partially thanks to the ludicrous EU carbon tax) and likely to remain so for some time; in time for US shale gas LNG exports to EU to reduce the price is my guess. EU gas futures are at a 2 year low now which shows you how cheap coal has become if gas generation is more expensive. CO2? Who cares, certainly not the Germans.

You have disagreed previously that (rising) temperature is a significant factor in the current low annual electricity demand. Obviously it is otherwise winter demand would not change, would it? The problem, as I have mentioned before, is that UK companies such as SSE see a marked reduction in profit as demand drops. However renewable generation, especially wind, is unlike their “liberalised” business and far more similar to their regulated business in that they are guaranteed a price irrespective of whether the UK wants or needs their power. Therefore, wind power swells and insulates SSE’s profit and I see no reason why that should not be the case for every other wind farm. Renewables to give cheaper electricity? I think not.

HansBlix also commented

  • DocM The logical answer to the Hinckley and Hunterston conundrum is that the theoretical output is more like 9.5GW and the whole fleet is running.
    I know we aren’t allowed to run plant at 100% but there you are …

    Secondly, SR and others, shock horror at breakdowns (call it what it is rather than the unplanned outages obfuscation) should be aware that this happens all the time with the whole generation fleet. Nuclear stations were built in the period when the first 500MW generating sets were built. Anyone with a long enough memory will remember the troubles at Cockenzie which was shedding turbine blades like confetti. I haven’t examined in any detail the few nuclear plants breakdown that there are but I’m prepared to bet that the boiler/generator are a factor.

    I am not advocating nuclear without being cautious even although the Mott MacDonald report says “bring ’em on”, but I am concerned that by a series of nods and winks EDF are going to convince the public that we’re ripe for shafting.

  • I appreciate that government sometimes has to rely on external sources to help them, but, Mott MacDonald who wrote this report (and numerous others for DECC) are giving Mott MacDonald’s view as they have done at every step. On something this critical we surely can employ people to do so within government?

    You’re not a very good poker player, levelised costs of £80 for CCGT and £94 for onshore wind is quite a bit more expensive?! They aren’t very good at forecasting either given that the estimate 10 years ago was around £30.

    DECC did make one contribution which was the estimated price of gas in 2030 at 74p a therm. Henry Hub is 29p a therm and UK current spot is about 50p. The report was written in 2010. 50p to 74p over 20 years is below expected inflation and gas might even have fallen since 2010. I am trying to mangle your ‘wind will get cheaper than gas’ assertion and it appears more and more of a gamble *unless* the subsidy is removed. Said more in hope than expectation …

  • SR. What I’m telling you is that there is just shy of 10GW nuclear capacity and from NETA, nuclear was churning out 9GW. It’s been doing this for some time. I agree that their performance in the past has been awful but something has changed. It is reasonable that they’re weeding out the rubbish, I don’t know. EDF must be bringing some experience and so on.

    I thought I had explained some posts ago how 90% is the absolute maximum.

  • So what you’re saying is that Exxon are not disclosing the true position to enhance their earnings at some time in the future? That was what I thought.

    The number of wells drilled was an analyst reaction in the FT to Exxon’s no oil report and I added the hundreds, incorrectly. I’m still puzzled as seismography will tell you the rock might be oil/gas bearing but I thought you had to drill to establish the extent and that could take a lot of wells.

  • Ferryman. 90% from British Energy. We have 8 of one type and one of the other – Magnox? – and it’s that one that requires extended inspection.

    Where does it say EDF want almost (?!?) 3 times energy prices.

    Do you want these things to fail? Are you such a pessimist?

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