Britain signed off on the most costly energy deal it has ever made this week – but the price we agreed for energy from Hinkley is still lower than the peak prices that will hit British wallets even harder, and sooner. Current commitments to renewable generation will cost each household £466 by 2020/21, the centre-right think tank the Centre for Policy Studies reckons. Yet the CPS highlights something often overlooked – the volatility of the spot market. On September 14, the day-ahead electricity price hit £999/MwH for more than an hour. Typically the wholesale price hovers around £45/MWh. This was the coincidence of unplanned shutdowns of our nuclear stations, the outage of the French interconnect, and a lovely heat wave. Hinkley Point C has a guaranteed price of £92.5/MWh, index-linked to 2012 prices. Gas and nuclear typically provide 70 per cent of our energy, with nuclear the most reliable and cost effective source for baseload. More of both sources would be the optimal cost effective energy strategy. But Britain’s dash for wind has hidden costs. Wind generates between close to zero and 11 per cent of electricity and the volatility has had a few side effects.
The Register 30th Sept 2016 read more »
Winter power prices have spiked upwards after EDF cut its projection for nuclear output due to safety tests at a number of its reactors in France. On 23 June the French nuclear regulator ASN ordered EDF to undertake safety tests on a number of its reactors in France to make sure they don’t suffer from a similar manufacturing anomaly to one uncovered at the Flamanville 3 reactor being built in Normandy. ASN said as many as 18 of EDF’s reactors could be affected. Last week, EDF announced that planned outages for refuelling had been extended because of the tests, in particular at its Tricastin 1 and 3 reactors. It said its target for nuclear output in 2016 had been cut from 395–400 TWh to 380–390 TWh and that it expected nuclear output in 2017 to be in the in the range of 390–400 TWh. Power prices shot up on Wedesday, seemingly after details of the safety checks and the resulting added maintenance were published in a French magazine. In France the price of baseload contracts for the first quarter of 2017 averaged €55.90, up from €47.90 on Tuesday. ICIS said it was the biggest day-on-day change for a three-month contract it has witnessed in 15 years monitoring the French power market. UK prices are often affected by developments on the French market due the 2GW interconnector connecting the two countries. The baseload price for the first quarter of 2017 rose from £47.65 to £51.23 between Tuesday and Wednesday, and the price of six-month contracts for the 2016/17 winter season jumped by 7.7 per cent. The last time there was such a big change in the price of three or six-month contracts was in 2008.
Utility Week 30th Sept 2016 read more »
Policies to support renewable generation will cost the average household £466 in 2020, a report published by the Centre for Policy Studies has claimed. It called for a new energy bill to “prioritise costs, competitiveness and security of supply” as the Energy Act of 2013 is based on flawed analysis and is “already out of date” due to the Brexit vote and changes to fossil fuel prices. If the cost of renewable subsidies covered by the Levy Control Framework (LCF) are in line with the £7.6 billion budget for 2020/21, then they will cost each household £281, both directly through their bills and indirectly through inflated prices for goods and services. The paper cited an annual estimate of £5 billion by Renewable Energy Foundation director John Constable for network and other costs that would be incurred due to renewable generation. These would cost the average household a further £185 in 2020.
Utility Week 30th Sept 2016 read more »