Prices soar and wind power fails to deliver, so how can suppliers claim to provide 100% green electricity?

DAVID TURVER

You can avoid reality, but you cannot avoid the consequences of reality.

Ayn Rand

Introduction

It has been a torrid week in UK and continental European energy markets. A high-pressure system over the North Sea has meant low wind speeds and wind turbines across Northern Europe have struggled to produce much meaningful output. So how have energy companies managed to honour their commitments to supply 100% green electricity?

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European Electricity Market Turmoil

Shortages of wind power have led to massive price spikes across Europe, with day-ahead prices reaching over €936/MWh in Germany and Denmark on Thursday (see Figure 1).

The UK has not been immune to these continent-wide challenges with day-ahead prices rising to over £400/MWh and one short-term bid being accepted for over £3,000/MWh on Thursday (see Figure 2).

The relentless push towards Net Zero with increased reliance upon intermittent renewables has made a mess of UK and EU electricity generation. Norway relies mostly on cheap, reliable hydro power for its electricity generation. However, the shortage of reliable generation in the rest of Europe has pushed up prices in southern Norway (see Figure 1 above) to such an extent that the two governing parties want to scrap an electricity connector to Denmark and there are also calls to renegotiate power links with the UK and Germany. Norway’s energy minister said “It’s an absolutely shit situation.”

UK Market Mayhem

We can see just what a mess the UK is in by looking at a snapshot of demand and supply from 09:30 on Thursday morning (see Figure 3).

Demand was just shy of 42GW and our >30GW of wind capacity was producing just over 1GW, with solar providing almost nothing. We were reliant on almost 27.7GW of gas-fired generation (CCGT + OCGT) supported by 3.8GW of nuclear and 2GW of pumped and natural flow hydropower. Biomass (aka burning trees) was providing 2.4GW with another 1.7GW of “other” generation. The much-vaunted interconnectors, supposed to enhance our energy security were providing a net 0.17GW, because even though we were importing the full 3GW from France, almost all of it was being re-exported to other countries. We were sending 0.8GW back to Denmark over the Viking link which when it opened with great fanfare last year was claimed to increase our energy security. Moreover, the EU is advising members not to give the UK greater access to their energy market. This does not bode well for our future energy security.

This turmoil in electricity markets caused the price of the Agile Octopus tariff to rise to the cap of 99.99p/kWh (see Figure 4).

Now the cause of this spike cannot be blamed on elevated gas prices. On Thursday, spot gas prices were 110p/therm which is about £37.50/MWh. At 50% efficiency, the marginal cost of electricity generation would be about £75/MWh plus about £14/MWh carbon tax, or around £90/MWh which is of course much less than the peak day-ahead price of over £400/MWh. The cause of this price spike is the systematic closure of dispatchable power plants over the years. Our last coal plant closed just a few months ago and our nuclear fleet has been allowed to dwindle. So, we are left with a bunch of ancient gas plants that cost an arm and a leg to keep in service but only used very infrequently. Generators can charge what they like because they know that the cost of the lights going out will be incalculable. This situation has been caused by a succession of incompetent energy ministers who for over two decades have prioritised virtue signalling over electricity costs and energy security. It is no surprise that we have the highest electricity costs in the IEA (see Figure 5).

What is both surprising and alarming is that with his new Clean Power 2030 Action Plan, Ed Miliband is doubling down on this madness. Apparently, he is considering holding the largest ever auction of renewables subsidies next year in AR7. His sole objective should be to cut power prices, but if he has to offer record subsidies, then renewables simply cannot be cheaper.

100% Green Electricity Claims

On Thursday morning, gas was producing two thirds of our electricity, but by 2030 Miliband wants gas to provide no more than 5% of our electricity over the course of a year. This got me thinking about how many of our electricity suppliers claim to be providing 100% green or renewable electricity.

Octopus claims to supply “100% green electricity” (Figure 6).

Ecotricity claims that their electricity is 100% green and just in case you were wondering, they even say that it is all animal-free (Figure 7).

They are not alone, because other large suppliers also provide 100% green energy tariffs. Eon offers a tariff that claims to be 100% renewable; EDF even offers the choice of which renewable technology you want your supply to be sourced from; Scottish Power claims to provide 100% green electricity from its UK windfarms; and SSE has a similar claim for one of its business tariffs. British Gas even claims to be providing “100% Natural UK Renewable Energy from solar, wind and hydro power generation” to some business customers.

How can all these electricity suppliers be providing 100% renewable or green electricity when wind and solar are generating the square root of naff all? Well, we should probably add hydro and nuclear to the list of green generators. Officially, burning trees as biomass is even classified as “green” even though burning wood produces more CO₂ and particulates than burning coal. But even so, when gas is producing two-thirds of our output there is no way that all the big suppliers can be simultaneously providing 100% green energy. There is even less chance SSE and Scottish Power can be providing 100% of their power from their own windfarms when the total output from the entire fleet is little more than 1GW. If solar is producing nothing and wind very little, there simply cannot be enough green renewable electricity available during these times for all the claims to be true.

REGO Racket

We can get a clue about how they manage to make these claims from British Gas (see Figure 8).

In the small print, we see that the 100% Natural UK Renewable Energy is in backed by Renewable Electricity Guarantees of Origin (REGOs). Ofgem tells us REGOs are issued for each MWh of electricity generated by accredited generators of renewable electricity. REGOs can be traded independently of the power that is generated. So, electricity suppliers can sell electricity generated by gas or coal, but then buy REGOs produced at a time when there was a surplus of renewables and use the REGO certificate to pretend that the electricity they sold was in fact renewable. According to Good Energy (See Figure 9), the price of REGOs soared as high as £25. The cost of this nice little earner (£25/MWh) will of course be added to our bills.

Unfortunately, I cannot find any data for 2024 and prices may well have fallen. However, regardless of the price of these certificates now, buying a piece of paper can never negate the emissions from the actual generation. REGOs amount to little more than a greenwashing racket. Claims of 100% clean renewable energy from all these suppliers simply must be false. I do not expect Ofcom or the ASA to act any time soon.

Last week, we hit over 3,000 subscribers to this Substack. This growing interest has led to me being invited to give a talk to Sacred Cows on 28th January in London entitled “Net Zero: Why the cure is worse than the climate change disease”. More details and ticket details can be found here, do come along if you can make it

This article (How Suppliers Deliver “Green” Power When Wind Runs out of Puff) was created and published by Eigen Values and is republished here under “Fair Use” 

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