Energy infrastructure

I just took my wallet out of my right pocket and put in my left. Strangely, I felt no financial pain whatsoever.

Heres a question I’ve being wondering:

we are hopefully going to get to 80% renewables by 2030 (highly doubtful if you ask me but anyway), which means fossil fuels (gas) will only be required 20% of the time- so over the year that’s approx 72 days- so what happens to the gas generators for the rest of the year regarding payment to the operators of the gas power station? They will have maintenance costs etc but they’ll have no way to pay for that as they can’t generate electricity- only when renewables aren’t generating- which would be 290 odd days of the year right?

Or have I got that arseways?

If the gas generators are subsidised for the 80% of time they are not generating are we not just paying for electricity generation twice- just to say we have an 80% renewable electricity generation system?

If so that’s crazy!

Modern gas (both open-cycle and CCGT) power plants have low operational costs (don't require many workers, require little maintenance) and low capital costs (the main components are "mass" produced) so the cost of producing electricity by this method is largely driven by the cost of fuel.

This is in contrast to large steam-turbine coal and nuclear facilities where cap-ex is a major component and where varying the output is expensive, slow and dirty so such plants quickly become uneconomic if not operating 24/7.

For example, the average capacity factor for an open-cycle gas peaker in the USA is about 12% according to the EIA (even less than the 20% you suggest) - these plants have held this (demand following) niche for years and have been making money doing so even while idling 85% of the time - long before the recent phenomenal growth of renewables.

Yes I understand that- however we clearly have to pay the gas generators when we they are NOT generating otherwise why would they stay in the market?

So in effect we are paying twice for every renewable GWH generated- once for the renewable source and once for the gas source to keep it in the market for when we need it 20% of the time (by 2030).

Unless gas generators are happy to take a reduced rate for when they don’t generate which I wouldn’t understand from their business case?

This has nothing to do with renewables - it's called the capacity market and it has always been around. If your plant has the facility to rapidly respond to demand, then you can bid in this market. The bids are to provide spare capacity (i.e. power availability MW) and promise to make it available to the grid on demand. You're effectively being paid to keep capacity idling/in reserve as a fall back for meeting demand. Thus the bids are in (derated) MW and not energy units - like MWh - which confused the hell out of most of the journalists who reported on the last auction.

Every grid, regardless of its generation mix requires and has always required spare capacity in this form.

Fracked gas has been the game changer in the US in terms of coal use

Sorry I’m still confused- how are we not paying twice?

We pay renewables generator for generating.

We pay gas generator for generating.

We pay gas generator for getting ready to generate according to wind forecast. (So we are paying gas plus renewables here)

Are you saying we won’t pay gas generators to be ready for the 80% of the time we won’t need them in 2030?

I don't know how to make it any clearer.

Capacity auctions have nothing to do with renewables. An intrinsic cost of running a grid is paying for redundant capacity to deal with unexpected demand spikes or interruptions in supply.

If you want a grid that can reliably mean demand, then the grid MUST have redundancy in the form of generator capacity which (hopefully) lies idle most of the time.

Think of it as a form of insurance that a grid operator must pay. Like the way airlines pay cash every year for the option to hire aircraft as short notice; a lot of the time they don't need it "so the money is wasted" but it still makes business sense.

You are also confusing (I think) two completely different segments of the market: the capacity market and the normal wholesale market.

Well I understand now that we pay renewables for what they generate but at the same time we pay gas a standby charge and a full payment when gas is needed to generate.

So in effect we are paying twice for renewables.

Do we know what percentage the standby is off the full rate?

I agree you should be able to ask the question and discuss the issue.

The thing is that you're obviously intelligent enough to understand the principle of paying for backup/redundancy as a cost of doing business in many other sectors of the economy. But you keep claiming to "not understand" when it comes to such a cost being associated with running a grid - which to be honest is hard to believe, given how straightforward the concept is.

And you repeatedly link this idea (of having grid backup capacity/redundancy) with renewables even though many have pointed out that it's a feature of all grids, regardless of the generation mix. This makes me think your problem is with renewables, not the grid capacity market.

So it feels like you're deliberately "refusing to understand" as a sort of passive aggressive way of argumentation which kinda wastes everyones time and suggests your "question" isn't a genuine question at all.

And it frustrates people - which is probably the reason for Sam' irritated tone.