Blow to UK energy plans as new gas plant in doubt 

Posted: October 11, 2015 by oldbrew in Energy, government, Uncertainty
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Gas power station [credit: gov.uk]

Gas power station [credit: gov.uk]


UK energy policy is in danger of crumbling, with delays and doubts over its nuclear plans and now a financial crisis facing its gas power plans, as the Daily Telegraph reports.

The UK Government’s plans to keep the lights on have suffered a fresh setback after it emerged the only new large gas power station due to be built in coming years is now in doubt.

Energy firm Carlton Power was awarded a subsidy contract by the Department of Energy and Climate Change last year to build a new 1.9 gigawatt plant at Trafford in Greater Manchester – big enough to supply power to 2.2 million homes.The £800 million plant was due to start generating in October 2018, but Carlton Power told the Telegraph it could no longer meet that date – and had so far failed to secure financial backers for the project to go ahead at all.


Mike Benson, Carlton Power’s business development director, said securing investment had proved “more difficult than we would have hoped” due to a combination of long-term policy decisions that had skewed the market, and uncertainty caused by recent cuts to wind and solar subsidies. The Trafford plant had been supposed to begin construction this summer after getting a subsidy contract through the Government’s ‘capacity market’.

Full report: Blow to UK energy plans as new gas plant in doubt – Telegraph

The Telegraph also notes that…’Industry experts have been questioning for some time whether the Trafford plant would be commercially viable with the level of subsidy it agreed in the capacity market.’

Comments
  1. Stephen Richards says:

    What a effing mess the UK is in. They simply can’t make a decision and stick to it. The school children in the cabinet are just totally incapable of understanding the consequences of their muddling and the like of Yeo and Gummer will simply disappear into a profitable retirement just before the collapse.

  2. Stephen Richards says:

    Classic example of failed central planning. Communism from the EU of which Dave wants to remain a member and now we know why. He can disappear to Brussels at just the right moment and drop his successor in the biggest pile of do dos. Just like Blair did to Brown.

  3. oldbrew says:

    Yes, having got rid of the level playing field in electricity generation by favouring renewables, now nobody else wants to play unless they get a fat bung from the government.

    Excluding any new interconnectors, there’s not much sign of any new generating capacity apart from unreliable renewables. Meanwhile coal plants are being closed as fast as possible.

  4. “Carlton Power signed up to build the Trafford plant in return for subsidies of more than £30 million each year for 15 years. On top of the ‘retainer’-style payment, it would then get revenues from selling electricity into the wholesale market.

    Mr Benson said long-term political intervention through “continuing direct subsidies for low carbon technologies such as wind, nuclear and solar” skewed the wholesale power market, making the price artificially low and making it harder to invest in gas plants. ”

    —————
    TFP
    so subsidising solar makes the price artificially low whereas subsidising gas @ £30M/year still does not bring the gas generating price low enough.

    Surely something wrong here!!
    ————–
    DT

    “Many existing gas-fired power plants are losing money currently. ”
    ————–
    tfp
    But I thought it was the cost of wind that kept the price high?
    ———-
    DT
    Mr Benson said: “Trafford could deliver reliable and flexible electricity at a long term price of around £72 per megawatt-hour, compared with the £92.50 per megawatt-hour guaranteed to Hinkley.”
    ————
    TFP
    7.2p/kWh GAS
    9.3p/kWh nuclear
    8p in 2013 for wind
    Strange world

  5. Keith Willshaw says:

    tfp wrote

    “TFP
    so subsidising solar makes the price artificially low whereas subsidising gas @ £30M/year still does not bring the gas generating price low enough.

    Surely something wrong here!!”

    Welcome to the real world

    A modern Combined Cycle Gas Turbine plant such as the one proposed for Trafford Park cannot start up and shut down instantaneously. When preference is given to unpredictable renewables it means that 90% of the costs remain when it is not allowed to sell its product to the grid. The renewables operators not only get better prices but are compensated for spare capacity that is unused.

    The estimated cost of the project is approx. £1.2 billion so £30 million per annum is not nearly enough to compensate for the uncertainty on income such interventions produce.

    In retail terms this is like a shop that only has stock for 25% of the time being able to shut down its competitors when it decides to open AND being allowed to charge higher prices. Would you open a competitive retail establishment on such a basis ?

    The end result will be no competition and people going short. Not a great way to run a country I fear.

  6. oldbrew says:

    Comparing gas power with wind power is problematic when one always has priority over the other.
    That’s why the playing field isn’t level – costs of playing second fiddle to renewables can’t be recovered, so investors and operators alike can’t win.

    It’s the same in Germany:

    ‘E.ON says it has no alternative but to close Irsching 4 and 5 gas-fired power units in Bavaria, Germany, citing mounting losses.

    What is one of Europe’s newest such gas-fired power plants is scheduled for a 2016 shutdown as conventional power continue to be relegated to the sidelines as Europe continues to replace them with solar and wind energy which has priority access to the grid.’
    http://www.powerengineeringint.com/articles/2015/03/e-on-opts-to-close-irsching-gas-fired-power-plant.html

    The joke is they aren’t ‘replacing’ them, just interrupting them. If they replaced them all with renewables they would be at the mercy of the weather for energy supplies, and all their industries would collapse.

  7. Fanakapan says:

    I suspect this has less to do with any supposed ‘Brussels Dictatorship’ than it does with the idea of privately owned utilities being a poor idea for long term investment in generating plant ?

    Obviously it costs a packet to build power stations, and the payback period is probably several decades beyond that which the rentier crowd can envisage without the sweetener of huge subsidies.

    I’d also venture to suggest that the coming supply Bonanza from fracking has had an effect on the decision ? There’s no doubt that scarcity turning into surplus will impact these Arthur Daley PowerCo’s significantly.

    The answer of course is simple, place power generation into public hands, maybe we could give it a catchy name, something like CEGB ?

    As its likely that the current government of corrupt failed clowns will gag at any mention of public ownership, we’d best lay on a supply of wax candles🙂

    Such a scenario also opens up interesting possibilities for Mr Corbyn, assuming he manages to stave off the Labour imitation Tory’s, he might just be the man whose ideas fit the times.

  8. Keith Willshaw says: October 12, 2015 at 2:26 pm
    The estimated cost of the project is approx. £1.2 billion so £30 million per annum is not nearly enough to compensate for the uncertainty on income such interventions produce
    ——-
    £30e6*15=1/3rd the cost of the station

    Base load gets one price
    load following gets more
    etc.
    see http://www.nationalgrid.com/NR/rdonlyres/76692EF3-1AE6-45E5-858F-C0FAD7F04BC4/0/leadtimes.jpg

    Bear in mind that wind does not instantaneously stop over the whole country. it takes time and to some extent can be predicted. So some of lost capacity can use lower priced back-ups even cold start.

    Very little spinning reserve is required for wind turbines. Most is required when a large generator trips out.

    An example of the loss of 1GW Dungeness B- the plot that follow use data generated every 5 minutes (the dotted curves use the scale on the right of the plots all vertical scales are in MW):

    note the use of pumped and hydro with the slow increase in gas and coal

  9. oldbrew says:

    Fanakapan: Corbyn may be an unknown quantity as a leader, but he doesn’t have much to beat when it comes to UK energy policy.

    On the other hand if he’s a renewables fanatic…

  10. Fanakapan says:

    oldbrew, I’m waiting for him to show his hand on that topic. He seems to be close to his brother, so I’d be surprised if he was a ‘Believer’ ?

    We’re certainly living in interesting times when the brother of one of the foremost sceptics becomes the leader of the party who pushed the Scam with the most zeal🙂

  11. gallopingcamel says:

    Closing gas powered plants in Germany simply makes their grid even more unstable than it already is.

    All it will take is some really cold weather with low wind speeds to cause a widespread collapse. That will probably cause some much needed changes in high places. A government that can’t keep the lights on is doomed.

  12. oldbrew says:

    TFP says: ‘Bear in mind that wind does not instantaneously stop over the whole country.’

    It doesn’t instantaneously start either. That’s the problem – or one of them.

    gallopingcamel says: ‘A government that can’t keep the lights on is doomed.’

    True, but with luck (for them) they can paper over the cracks for quite a few years with interconnectors, temporary start-ups of old ‘moth-balled’ power stations and so on – as we’re seeing already.

  13. ivan says:

    TFP,

    You say Very little spinning reserve is required for wind turbines. I assume that is because wind produces so little power to add to the grid.

    Somehow I don’t think you are an engineer or involved with the power generation industry because if you were you would understand the stupidity of your remarks.

    Wind will never supply base load and as such should receive a much LOWER price than anything generating base load. Another thing, there should not be any subsidies (guaranteed payments) of any sort for non base load power generation because having them distorts and raises the consumer costs so destroying industry and reducing public wealth.