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Comment by simplisticelk | Hacker News Reader

This is an extremely misleading way to report the cost of energy. It’s almost meaningless to compare the cost of wind to the cost of gas because more wind does not reduce the need for gas plant. It may reduce gas utilization, but it will increase the cost of gas on a MWh basis by increasing capacity prices.

Yes, more wind will reduce emissions, but these prices don’t mean they will reduce total system cost.

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Operating costs dominate the cost of natural gas electricity, not the capital costs. An idled gas plant does save considerable money.

Absolutely, as long as a the energy of a wind farm displaces enough MWh of gas to cover its capital costs (incl. network costs) at the marginal price of gas it should reduce system costs. But wind energy output across an area the size of the UK is so highly correlated that additional wind capacity has diminishing returns. I suspect that the UK is already beyond the point by which additional wind is economically beneficial, but I’m not certain about that.

Also, if gas utilization falls dramatically capital costs will come to dominate. It’s not just the turbines, the gas network is costly.

If electricity spot prices is cheap enough (when available), then people will eventually find uses for it. This will drive economic development.

Finding economically viable uses for intermittently cheap energy has proven to be quite difficult. Most energy intensive industries require high capacity factors to cover capital costs.

£90 wind energy does not make for a low cost energy environment. And if spot prices dropped substantially the UK government is going to be taking a massive loss on these contracts.

I’m coming across as very negative in this thread, but I do really want renewable energy to succeed. I just work in the industry so I’m very aware of how challenging it is to make the economics stack up, so I find these puff pieces a bit exasperating.

Life will find a way!

> I suspect that the UK is already beyond the point by which additional wind is economically beneficial, but I’m not certain about that.

I don't buy it. Just before Xmas the grid managed to move about 23GW of wind and it was a record. 23GW is lots but there was peak demand at that time, about 14GW of gas was still running when they hit that record. How can it be of no benefit to expand beyond that ?

I don't expect to even start worrying about the factor that's got you scared until we have a whole day when the CCGTs aren't running.

You very well may be correct, but it’s really not about how much it displaces at demand peaks (BESS is more likely to displace gas peaking). It matters how much it displaces over years and how often the additional output is surplus to demand. Long past uneconomical wind expansion you’d expect to still be running CCGTs over winter.

UK is currently limited by transmission. Gas can only be displaced by wind if the energy can be transported to the location where it is being consumed.

Capital costs starting to dominate doesn't mean that they increase.

If capital costs are 10 and operating costs are 90, but later operating costs become 1, the capital costs remain 10 and the price to recover the capital costs is the same.

Of course the capital costs need to be spread over less kwh, so the kwh will become more expensive, but what matters is the avg (and thus total) cost paid, and that would be lower.

E.g.

5B in capital cost for 25MW (amortized in 25 years), and 30 per MWh in gas cost.

If you produce 180TWh (20h daily of production) the average price cost will be (5'000'000'000/25 + 180'000'000*30)/180'000'000 = 31 per mwh.

If you produce 36TWh (5h a day) the average cost is 35, but the total cost is significantly lower.

At the limit, if the power plant produces 1MWh in the whole year, it will cost 200'000, but paying that MWh that high enabled the system to pay for all the rest of the year the electricity at less than 31. You need to look at the total cost paid in the end by users, not at the marginal costs in some situations.

Is that why corporations bid to build wind power in the UK EEZ at record-low prices? :)

Not only do the existing wind farms reduce the price of electricity by saving gas, they have had much larger effect on reducing the price households pay for gas itself, by reducing demand for that commodity.

Over the period 2010 to 2023 they reduced electric bills in the UK by about 14 billion, but reduced gas bills by about 140 billion!

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