My translation, to enable me to work out what was going on, is as follows.
A typical power station, like the new Keadby B, has a maximum power output of 500 MW or about 5 billion units per year (5 BU/y)
In the old days, gas fired power stations like the new Keadby B which could provide 5 BU/y if run flat out, would on average run for about half the year because they were on full power in winter and low output in summer, delivering 2.5 BU/y.
With very rough figures, at today's prices, they would be charging the grid about 10 p/U. With distribution, metering, billing costs and profit, this ends up costing the consumer about 25 p/U.
The annual income of Keadby B is easy to calculate - 2.5 BU/y x 10 p/U = £250 million/y, ie £250M/y
The power station needs to pay for its fuel, around £150M/y, leaving a gross profit of £100M/y. It has to staff and maintain the power station. But the biggest cost is building the power station itself - £350M. The investors need an income of £35M/y just to repay that investment. All in all, this means that gas power stations running as much as they can are financially viable.
In these new greener times, a power station like Keadby B is not run for half the year. Indeed the whole purpose of government energy policy is to use as much wind and solar as possible and run the gas power stations as little as possible, perhaps for only 40% of their normal total output.
So instead of delivering 2.5 BU/y, it delivers 1 BU/y and, at 10 p/U, charges the grid £100M/y.
Proportionally its gas costs actually go up because the power station is being used intermittently according to how hard the wind blows. But even if we ignore that extra loss, gas costs are about £60M, leaving a gross profit of only £40M/y. That simply isn't enough to cover the costs of running and making a £350M power station. So investors stop making new gas power stations and governments panic because, without gas, we get blackouts when the wind stops blowing.
That's where the capacity prices come in, which are fees paid to gas/oil/coal power stations just to be there to save us from dunkelflaute (dark windlessness).
The passage quotes a capacity price of $120,000 per MW per year, roughly £100,000 per MW per year. I have to explain this to myself slowly.
This means the government pays fossil fuel suppliers £100,000 per year for each MW of generating capacity they keep available.
Since Keadby B has a capacity of 500 MW, it gets a subsidy of 500 MW x £100,000/MW.year = £50M/year. It is that subsidy which makes it worthwhile to make gas power stations which end up being used well below their potential.
Remember that our under-used power station delivers 1 BU/y or 1000 MU/y. For that it gets a subsidy of £50M/y.
The subsidy per unit is (£50M/y)/(1000 MU/y) = 5 p/U. So our underused and subsidised power station, normally delivering power to the grid at 10p/U costs an extra 5p/U in subsidy.
The above is worth an article on its own, I think. Feel free to use it, or I'll place it elsewhere.
My translation, to enable me to work out what was going on, is as follows.
A typical power station, like the new Keadby B, has a maximum power output of 500 MW or about 5 billion units per year (5 BU/y)
In the old days, gas fired power stations like the new Keadby B which could provide 5 BU/y if run flat out, would on average run for about half the year because they were on full power in winter and low output in summer, delivering 2.5 BU/y.
With very rough figures, at today's prices, they would be charging the grid about 10 p/U. With distribution, metering, billing costs and profit, this ends up costing the consumer about 25 p/U.
The annual income of Keadby B is easy to calculate - 2.5 BU/y x 10 p/U = £250 million/y, ie £250M/y
The power station needs to pay for its fuel, around £150M/y, leaving a gross profit of £100M/y. It has to staff and maintain the power station. But the biggest cost is building the power station itself - £350M. The investors need an income of £35M/y just to repay that investment. All in all, this means that gas power stations running as much as they can are financially viable.
In these new greener times, a power station like Keadby B is not run for half the year. Indeed the whole purpose of government energy policy is to use as much wind and solar as possible and run the gas power stations as little as possible, perhaps for only 40% of their normal total output.
So instead of delivering 2.5 BU/y, it delivers 1 BU/y and, at 10 p/U, charges the grid £100M/y.
Proportionally its gas costs actually go up because the power station is being used intermittently according to how hard the wind blows. But even if we ignore that extra loss, gas costs are about £60M, leaving a gross profit of only £40M/y. That simply isn't enough to cover the costs of running and making a £350M power station. So investors stop making new gas power stations and governments panic because, without gas, we get blackouts when the wind stops blowing.
That's where the capacity prices come in, which are fees paid to gas/oil/coal power stations just to be there to save us from dunkelflaute (dark windlessness).
The passage quotes a capacity price of $120,000 per MW per year, roughly £100,000 per MW per year. I have to explain this to myself slowly.
This means the government pays fossil fuel suppliers £100,000 per year for each MW of generating capacity they keep available.
Since Keadby B has a capacity of 500 MW, it gets a subsidy of 500 MW x £100,000/MW.year = £50M/year. It is that subsidy which makes it worthwhile to make gas power stations which end up being used well below their potential.
Remember that our under-used power station delivers 1 BU/y or 1000 MU/y. For that it gets a subsidy of £50M/y.
The subsidy per unit is (£50M/y)/(1000 MU/y) = 5 p/U. So our underused and subsidised power station, normally delivering power to the grid at 10p/U costs an extra 5p/U in subsidy.
The above is worth an article on its own, I think. Feel free to use it, or I'll place it elsewhere.
Good wishes, Mark Ellse
Hi
You might find my own take on refuting the idea that Weather-Dependent "Renewables" are nine times cheaper that fossil fuels.
Please reuse or reference these posts at will.
https://edmhdotme.wpcomstaging.com/the-myth-of-cheap-renewable-power-in-the-uk/