Energy Security Strategy: How would switching to renewables save us money on fuel bills? | UK News
Figures seen by Sky News show the cost of producing wind power will be less than half the cost of gas this year and could drop to a quarter in 2023.
The government today announced its long-awaited energy security strategy and set out plans for how the UK will produce more of its own energy.
This has environmental benefits, but the aim is also to reduce dependence on Russian oil and gas and help combat soaring energy prices.
After the price of a standard bill rose by more than 50% last week, pushing more than a quarter of households in England into fuel poverty, the fact that wind is cheaper than gas is more important than never.
Rising fuel costs, together with technological advancements in the wind sector, have made it cheaper to produce a unit of energy from a wind farm than a gas-fired power plant for the first times in 2021.
The way to measure the cost of producing energy from different sources takes into account all the different costs involved over the lifetime of a plant – construction, fuel and maintenance – and the amount energy it can supply during this period.
Energy from new onshore wind farms costs less than half the price of energy from service stations already built and in operation. With offshore wind, it’s less than two-thirds the price, according to BloombergNEF researchers.
Researchers expect the price of gas to fall slightly next year, so it will again be a similar cost to offshore wind, before rising again for the rest of the decade as the wind continues to drop. Gas will remain more expensive than onshore wind everywhere.
Other energy analysts, from consultancy LCP, say they believe the price of wind power will fall to about a quarter of the price of gas power in 2023.
How much wind power are we currently using?
Wind is already the UK’s second largest contributor of energy, having increased nearly 20 times over the past 10 years.
Although the environmental benefits of wind power have driven most of its boom so far, political and economic factors are key to why plans are being accelerated now.
The Prime Minister told wind industry leaders last week that his long-term strategy to reduce dependence on fossil fuels had become even more crucial since Russia’s illegal invasion of Ukraine.
Using less gas not only takes us away from dependence on foreign fuel supplies, but also limits the impact on our energy bills of global gas and oil prices.
Why are the bills still high?
Right now, it’s hard to see how cheaper wind power is helping to lower our energy bills. This is partly related to how the National Electricity Grid Operator (ESO) balances the energy we use.
The National Grid ESO has sophisticated models predicting how much energy the country will need for a given half-hour period, based on habits we know like when people cook or turn on the lights, as well how cold it is and how many people will have their heating on.
The ESO then brings power on board, using the cheapest possible suppliers, to meet this need.
A National Grid ESO spokesman said: “Our license rules mean that we must always use the cheapest form of electricity available, we are technology agnostic.
“Prices are market driven, so we are not immune to global issues such as the rising cost of wholesale gas. We have a diverse generation mix and as we bring in more energy renewable, with the technology to store that energy, we will become more energy independent.”
Using the cheapest suppliers means they will generally start with renewable sources – wind, solar, tidal – then move to nuclear and the most efficient gas suppliers, before resorting to the most expensive gas and coal suppliers only if there is still demand. .
In fact, we pay the full cost, balancing the cheapest energy sources against the most expensive. Costs are paid by industry, but ultimately passed on to bill payers.
We also continue to pay for power from older wind farms at the higher rates they were built at, before advances in technology made it cheaper to build larger, more efficient turbines that can deliver more power.
Dr Simon Evans, deputy editor and managing editor of the climate change publication Climate Brief, said “renewable energy does make the bills a little bit lighter because it keeps us from using the cheapest gas and coal. Dear”.
“They cut the equivalent of around £10 off their bills last winter and would have saved around £100 had we already built the wind and solar farms which are under contract or due to get contracts this summer.
“But the wholesale price of gas is still the most important in determining the price we pay – it drove about 90% of the increase in bills.
“If we had more renewable energy, they would benefit more from the higher bills.”
So, despite the complicated mode of payment, minor improvements are already being made to people’s bills thanks to renewable energy, and more significant ones are to come in the future. However, this does not answer the question of supply.
What happens when the wind doesn’t blow?
In previous years, energy supply was relatively predictable. The National Grid ESO can reliably predict how much energy a gas or coal-fired power plant will produce per hour, and compare it to how much energy it thinks we will need.
Now that the UK is using more wind, supply is less predictable in the short term.
Just as the country is unable to control the world price of gas and oil, it also doesn’t have much influence over the weather – how much the wind blows or how much the sun shines.
On January 29 this year, the wind was responsible for its highest ever daily energy output in the UK – 409,107 MWhs. This was more than half of the total energy used in the UK that day.
On days like this, the grid is able to avoid buying from the most expensive suppliers, which lowers overall energy costs.
But on January 25, just four days before that record production, the wind wasn’t blowing as much and the grid was able to buy less than 100,000 MWh, a quarter of what it had bought on January 29.
So some of the more expensive suppliers would have had to be contacted to meet the demand, which would have driven up the overall costs.
Gas and coal suppliers that are generally not lit will charge the highest rates, in part because stations are expensive to light cold and have to stay lit for a period of time, for reasons of security. But also because those who sell energy know that times are desperate and they can just ask for more.
A solution to this is to be able to store the energy created from the wind and the sun when there is more production than can be used at that time.
Storage is usually either in batteries or in the form of hydrogen which can be extracted from water when the turbine is running, and stored to be burned when needed later.
These storage options can be expensive – so transitioning to a renewable system that could cope with cold, quiet and dark times could still be costly even if the “fuel” is free, but Dr Evans says such a system would still be cheaper overall.
“Because wind and solar are very cheap, the overall costs are lower even when you pay for storage and for building the storage technology.
“Prices will fluctuate more hourly than they do now, but average costs would still be lower than they are now.
“The way consumers pay for and use energy right now means hour-to-hour changes won’t be that noticeable – you’ll just see the overall price go down.
“But we could get to a stage where we can set up smart chargers to charge your electric car only when the wind is blowing strong, and sell power back to the grid when it’s not.”
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