Guys, just catching up on stuff, looks like a good time to jump in and try provide some answers to the questions on the ‘Why green electricity prices go up when brown prices do part 2‘ post. It was too big for a comment reply really 😉
Where to start… OK – ROCs and REGOs.
ROCs derive from the UK’s Renewable Obligation that obliges all suppliers to hold certain small percentages of ROCs as a proxy for having green electricity in their mix – this % goes up each year by about 1% and is currently approaching 10% as an annual obligation.
ROCs are widely traded separately to power. For example the Big Six are always drastically short of ROCs and seek to buy them as stand alone bits of paper wherever they can.
Good Energy are also short of ROCs which seems odd when you think that they buy 100% green electricity from the markets and their obligation for ROCs is still in single figure percentages by contrast. The reason for that is that GE buy most of their power without ROCs.
Ecotricity is long in ROCs. This year our own green energy is over 50% of our fuel mix. The 37% figure BTW is last year – all Fuel Mix Disclosure is a year in arrears – because electricity supply isn’t complicated enough… So Ecotricity has over 50% ROCs and needs less than 10% – roughly speaking.
When financing windfarms the income from selling ROCs is half the total windfarm income – it’s a vital component. That’s one reason we think retiring ROCs is a crazy self defeating idea – ROCs are designed to make windfarms economically viable, so that more get built, and they do that well. To ‘retire them’ is close to self immolation … 🙂 Well it is if you’re about building anyhow.
The other reason we’re against the practice is that it achieves nothing (except false hope) – the ASA have banned the claim that ROC retirement leads to more building – because GE and others have been unable to prove it. Won’t go into more here, it’s just something that sounds good in principle but in practice it’s nonsense.
So Ecotricity uses ROCs for what they are intended. GE uses them for greenwash IMO.
It’s the customer that pays for ROC retirement though.
ROC retirement is at least part of the reason that Good Energy are the UK’s most expensive electricity supplier. Or is it?
Anthony says Good Energy claim to retire 15% ROCs – the claims made by their team on the phone do indeed vary widely up to and beyond this amount. But the actual official claim is 5% of ROCs. This is the claim that GE made to NCC and to FOE et al for the last 5 years. NCC said this explains the (hefty) premium for Good Energy.
It doesn’t though – this amount of ROCs would cost about £25 per customer whereas the premium was £80 a year when NCC wrote that. (BTW it’s only £50 as of this week)
GE has been talking about building new green sources for 10 years or so, since the day they got started in energy supply. It may well happen one day. They came up with the idea of ROC retirement because it was something they could do and they needed a green story, an edge to claim greater greenness from. It’s not more than that. It’s an all but abandoned philosophy now.
There is more to this story though, something rotten at the heart of it all – coming soon.
Moving on to REGOs – these are certificates based on an EU wide scheme to verify and demonstrate the veracity of fuel source. Each unit of green generated gets one and each unit of green sold has to have one attached to them. Fuel Mix Disclosure is EU wide law and uses REGOs as evidence of source. REGOs are sold separate to power though. And it doesn’t matter for reasons of practicality/laws of physics.
This links to my comments that basically you buy non de script power in the wholesale markets, attach a REGO and it’s green. At its simplest this is because we can’t direct the flow of electrons to our customers and the grid system is a big mixing pot. Inputs are measured and can be offset against outputs – and that’s how the system works. But specific electricity can’t be delivered, so bits of paper are used to make sure that things like greenness are only sold once.
Moving on then to how many windmills will it take to power the UK. The rough rule of thumb that I use is it takes 1,000 MW to meet that 1% annual RO increment – it’s close but not forensic BTW.
On that basis we need 100,000MW of wind to power the whole UK – not allowing for issues of demand and supply balance – just total use.
That’s 50,000 of our 2MW machines, 33,000 of today’s typical 3MW machines and only 20,000 of the 5MW machines that are now appearing and will surely dominate in the future. Turbines up to 10MW are highly likely – that would obviously only take 10,000 – the reality will be a mixture of turbine sizes of course, as we build as we go.
As to land use – Many years ago an outfit called ETSU (gov quango..) undertook a study of the UK’s usable wind resource on land – and the word usable is important. They concluded that we had enough usable sites for wind energy to meet our entire electrical needs 3 to 4 times over. That was almost 20 years ago, with 20 year old technology.
Looking at it another way – on the question of spacing turbines – we reckon that in any given land area a wind farm will occupy just 1% of the land itself – due to spacing needs. Jeffrey calculates for us here that 1% of the UK’s land is 360,000 turbines – that’s 3 to 4 times the number of turbines my rule of thumb says we need for 100%. Which chimes with the ETSU study.
The big caveat that needs adding is of course supply and demand balancing – and let’s not forget energy use reduction.
I don’t disagree with Prof McKay on the need for us to reduce energy use, but I do disagree with his apparent fixation on that to the exclusion of actually building renewable forms of power. The two things are not opposing forces – they are reinforcing – we need to use less and make what we have to use, from renewables.
If we can reduce our consumption by 50% we need just 50,000 of today’s turbines and just 5,000 of tomorrows…. The UK has 2,500 already BTW (although smaller and older types)
There will still be supply and demand to balance though even under the best reduction scenario. For that we have the concept of Intelligent Demand, forget the days of dumb ‘energy on demand’ we can run the grid and our lives more efficiently. And we will.
I believe that the UK should generate way more than 100% of its needs from wind (onshore of course) and should export and/or usefully ‘dump load’ using large scale Intelligent Demand – because the ‘longer’ we are in terms of wind capacity (compared to needs) the more of the time that we will have enough when we need it – and also because we have so much wind – why not use it.
The fact that wind is free and clean (and endless) requires a new mindset to some degree – we need not be constrained by our total annual usage, let’s build 200% or 300% wind for example – generation will match demand more often/easily and there must be many good things we can do with that (surplus) energy. Just a thought.
I think that might cover most of the points! Cheers all.