The Obscene Profitability of Wind Power

Due to the pandemic and the virtual shutdown of the national economy the day-ahead wholesale price of electricity has plummeted. In May it averaged  £22.17 MWh. There have been occasions where the price has gone negative for several hours at a time. Normally the average monthly price per MWh is around £45.

As you can imagine this is really bad news for any generator that is dependant on the market price of electricity to support its operation.

But one group of producers has no worries.  

The subsidy payments received by generators classed as "renewable" dwarf these market prices. 

Here I’ll just deal with the most outrageous and costly i.e. windfarms. But biomass, Solar PV and others are all excruciatingly expensive too. Its just there's less of them.

The effect of the subsidy payments to wind-farms is such that until the price goes significantly negative it is not in their interest to shut down. They have privileged access to the grid so can demand access when the wind blows whatever the current grid status. But they suffer no penalty when they (often) fail to produce when needed. 

So in times of low demand and high wind they continue to produce. They only stop when they get bought off by the National Grid with what is known as a constraint payment. In 2019 wind turbine constraint payments came to over £139 million. Money for nothing – except to stop risking overloading the grid.

Today almost all wind-farms are subsidised by the now defunct Renewable Obligation scheme (RO). This was replaced in 2017 with Contracts for Difference(CfD) which is arguably even more costly and inflexible than its predecessor. 

ROC stands for "Renewable Obligation Certificate". Today one ROC is worth £50.05. Every time a wind turbine produces one MWh of electricity it gets the market payment for that MWh topped up an amount dictated by the RO scheme

A land based wind turbine gets 0.9 ROCs (£45.05) + Market Price for each MWh.

A offshore wind turbine gets 1.8 ROCs (£90.10) + Market Price for each MWh.

So back in May on average a land based wind turbine was in total being paid about three times the market price while an off-shore turbine was paid fives times the market price. In normal times they still (on average) get paid double and triple the market price per MWh respectively.

Even at times of oversupply, when prices fell to zero (or below) they were still guaranteed that subsidy – or an even larger constraint payment.

This RO subsidy scheme for wind turbines alone is currently costing UK customers £2.7 Billion a year and will continue to do so for the next 20 or so years. Here's the figures on the REF website

The companies running these wind-farms are over-joyed at their profitability. Truly when comes to acting as money making machines all other unsubsidised generation capacity pales by comparison. Look at this chart (HERE) from OfGem and weep.

So while renewable generation undermines the integrity of the grid it is obscenely profitable. 

Why is it so profitable? 

Because of a massively over-generous ROC subsidy. A subsidy which, at the end of the day gets paid by the consumer.

Years ago when the RO scheme was dreamed up, the idea was that the payments (i.e. number of certificates issued per MWh) would be changed as the technology/costs/profitability evolved. 

However this was only done once. When the ROC payments per MWh for on-shore and off-shore turbines were slightly reduced from 1.0 and 2.0 to 0.9 and 1.8 respectively it caused such a mountain of complaint from the renewable industry that it has never been attempted again. So today these vastly extravagant payments remain untouched. 

I suppose though we should be grateful that they are not on the new CfD scheme. This guarantees an index-linked fixed price. 

Current offshore windfarms using the CfD scheme are: 

• Beatrice (g’teed £162/MWh) 
• Burbo Bank Extension (g’teed £173/MWh) 
• Dudgeon (g’teed £173/MWh) 
• Walney Extension (g’teed £173/MWh). 

All of these make the RO scheme look cheap! These prices are index linked and so will only increase as time goes on. 

Of course today we have the wind industry crowing about “falling” CfD’s for future (i.e. jam tomorrow) wind farms. Much is being made of the proposed future Dogger Bank offshore scheme where the CfD auction was won at £48/MWh. 

But will they ever be built at that price? Besides that we are still lumbered with the excruciatingly over-priced one we have today!

A few years back there was similar huge publicity for Solar PV when CfD auctions were also won at around £50 MWh. It was headline news on the BBC and  all over the papers. Then after the razzamatazz, it all went quiet.

None were built. Just more unsubstantiated hype. More jam tomorrow. You have to give it to them though. It was wonderful propaganda.

Today the UK consumer (and industry) are literally being robbed by the big energy companies and their renewables scam. Large companies stack up huge profits from wind farms. Not because their wind turbines are wonderfully efficient (far from it) but because they are hugely subsidised

There is no excuse for this. The RO scheme was designed to be flexible and take into account the varying profitability of renewable generators. But today  it has ossified to the benefit of financial parasites.

If the UK govt had any balls it would cut the ROC (at least) in half and phase it to zero within 5 years.

But you know and I know that won't happen. Wind turbines are simply too fashionable. Nobody dares question their economics, or who actually ends up paying for this extortion racket.

So just get used to being robbed for the next twenty years. You (and I) have no other choice.

But perhaps we don't have to stay quiet while our pockets are being fleeced.

The Trouble with Heat Pumps Part 4

This is the last in a series of four posts where I have tried to challenge some of the over-selling and hype surrounding heat pumps. The start of this four post series is HERE.

In this post I want to look at the concept some people promote of a mass national replacement of gas boilers with heat pumps.

The purpose of this mass adoption would be to replace the current usage of natural gas for domestic heating. This would be done solely to cut Carbon Dioxide emissions. It would serve no other purpose. 

Currently 85% of UK homes are heated by natural gas. So this replacement concept is not for the faint hearted.

Last year domestic gas use was 310 TWh.  (Cooking accounts for under 3%) (DUKES spreadsheet HERE)

Meanwhile the entire national usage of electricity was 324 TWh (DUKES pdf Here)

In other words, gas usage for domestic heating (mostly over a short 4 month period) more-or-less matched the entire electrical generation of the UK for all types of use over the full year.

So if we assume that domestic heat pumps can deliver 3:1 energy output when compared to gas, then nationally we will need an extra 100TWh/year of electrical generation to drive their compressors. (The 3:1 is a big assumption – See last post Here)

An extra 100TWh is roughly equivalent to an increase on current generation of 30%. This though does not account for the fact that most of that 100TWh will be required over a four month period and the generation capacity will be surplus to requirements in the summer. But never mind.

So how can this be powered? Of course the "green" solution would be to use solar and wind. In my opinion neither solar or wind could remotely address the demands placed on them for this. But never-the-less, lets look at them and skim over their lack of capability where possible.

Solar. Sadly the incapability of solar in winter is so marked it is impossible to skim over it's failings. In winter there is little sun. So there's little electricity generated. It's probably best for me to let the Centre Alternative Energy explain it to those who disbelieve me. (HERE - see Q&A at end)

Wind. Currently the existing Wind turbine fleet intermittently generates about 20% of current UK demand. There are, in total around 11,000 wind turbines both onshore and offshore in the UK. If we forget about intermittency, grid connectivity, site availability, storage, sea bed damage and impact on those living nearby we would need another 16,500 turbines, just to cover domestic heat pump use in homes.

 The current wind fleet has cost well in excess of £50 Billion to build and only functions due to massive on-going government subsidies. An additional 16,500 turbines would add another £75 billion.  But it doesn’t stop there. Increasing the carrying capacity of the Grid  as well as connectivity, backup supply and cabling would add at least another 25 – 50 billion.  Say a £100 billion all-in – and that, I would suggest, would be wildly optimistic.

But really that is small beer compared to the cost of installing the heat pumps themselves.  Half of the cost is installation and groundwork and so is fixed. Even if we assume the price of the hardware halves we are still looking at £12,000 per installation averaged across GSHPs and ASHPs.

Lets assume the target installation is in 19 million homes.  (As suggested on record by  Committee on Climate Change and also stated HERE ) So the cost of installing heat pumps in these 19 million homes comes out at a whopping £228 Billion.

So all in, to convert 19 million homes to heat pumps would cost well in excess of £325 billion.

In essence we would be spending over £325 Billion to  replace a perfectly serviceable (and more capable) gas supplied heating system. We would be doing this in order to cut Carbon Dioxide emissions from the cleanest fossil fuel available while plenty of dirtier targets remain.

Even if you substitute in more realistic and capable methods of generation (like nuclear - or even gas!) the figures are still ruinously huge. 

Reduce the adoption rate the figures remain ruinous, just less so. It is only when you get to very low rates of adoption (like today) that the pain reduces and heat pumps can run off existing electrical supply without the need for more infrastructure. 

Mass adoption of Heat pumps to replace gas boilers is a non-option. They are less capable and cost far more to install and run than the condensing gas boilers they are supposed to replace. Even so, there are lunatic plans in place to ban new gas boiler installations in new build properties by 2025. (See Here) 

On the plus side heat pumps do make great talking points down the golf club or in a Green Peace meeting and are marvellously fashionable and very, very politically correct. Sadly though when it comes to heating the average home they are not in the same league as condensing gas boilers.

Without the governments bribe Renewable Heat Incentive, uptake would peter-out to nothing. The zealots and the rich would baulk at the cost. Even with the current bribe the take up rate is so pitiful that it would take 700 years to replace all 19 million gas boilers

So how can we reduce Carbon Dioxide? More to the point how can we reduce Carbon Dioxide at significantly less than £500-£600 a tonne? These are difficult questions. 

But clearly, heat pumps do not provide the answers. 

To pretend they do is criminally irresponsible.

The Trouble with Heat Pumps Part 3

The last couple of posts I have looked at Ground Source Heats Pumps (GSHP). (See HERE)

This post deals with Air Source Heat Pumps (ASHP). Like their more expensive (and more capable) GSHP cousins, ASHPs are the subject of the most incredible wishful thinking, promotion and propaganda. This is what I hope to address here.

An ASHP (as the name suggests) takes its heat source from the air rather than the ground. Consequently instead of having a pipe system buried under the lawn there is a large out-door box with a fan that pumps air past a heat exchanger. It is significantly less expensive to install than a GSHP and requires minimal ground work. i.e. Maybe the laying of a concrete pad for the system to stand on.

There are in fact two types of ASHP. The most common is a wet system which I highlight in this post. This delivers the heat to water which is then used to transfer the heat to the house like a traditional central heating system does. 

The second type is a dry system that delivers the heat to the house as heated air. This system does not usually provide hot water. As I understand it, due to the additional problems a dry ASHP has when heating both home and hot water the government do not provide access to the  bribe Renewable Heat Incentive for a dry system. 

With an ASHP you still need a garden, or at the very least a suitable outside wall. As the things have an intermittently rotating fan (and so make noise) their location has to be in such a position it won’t annoy the neighbours. Or annoy the owner for that matter.

The installation costs are well below that of a GSHP.  This table from Tradesmencosts.co.uk HERE suggests the cost is about half that of a GSHP. 

To make the system effective you will also need to install underfloor heating or (at least) increase the size of your radiators. In essence, you would need to completely rebuild your central heating system. Then I'd suggest you would need to redecorate. Most sites also recommend you upgrade your household insulation. None of these extra costs are included in the figures in the table above.

The big issue with ASHPs is that their heat source (the air) is not always at a positive temperature. When ASHPs are required to work the hardest (cold weather) their efficiency is compromised. Even so, you will often find ASHP COP values, obtained during almost ideal conditions being used to promote their use year round. (like HERE)

With all heat pumps we really (really!) should NOT assume the COP value is a good indicator of their overall efficiency or capability. A far better figure is the SPF (Seasonal Performance Factor). 

Further-more we need to ensure we use an SPF that is calculated using the full system (H4) NOT simply for the heat pump itself (H2 or even H1) which ignores energy used by backup/boost heaters, immersion and the fan. Here is a diagram (from HERE) that itemises the difference between SPF vales for H1, H2, H3 and H4

I suspect that even if we use (as we should) SPF(H4) this still does not take into consideration the energy that is sometimes needed to de-ice ASHPs in sub-zero temperatures.

A realistic value for the SPF(H4) for a ASHP is 2.44. 

This is the median value obtained over a large 2017 DECC  sponsored analysis  (contractors RAPID-HPC) of many hundreds of of ASHP installations. The data was collected between 2013 and 2015. (Report HERE)

Notice that this is actually below the current minimum value Ofgem (SPF - 2.5) stipulate for claiming the bribe Renewable Heat Incentive! 

From the graph below it looks like the majority of ASHPs analysed by DECC are operating below and in some cases well below an SPF of 2.5. I'd put money on it though that they all successfully claim the RHI subsidy (or the then RHPP equivalent).

ASHPs are on the left and GSHPs on the right right. Notice the ASHP results are significantly weighted to the lower performance values. 

"cropped" means these graphs above have excluded very low and high values. 32 sites (25 ASHP 7 GSHP) were excluded. Of those, 29 had an SPF(H4) less than 1.5. Only 3 had an SPF above 4.5

Like GSHPs, ASHPs typically provide output hot water to the central heating system at less than 40 degrees C. (The Centre for Alternative Energy (HERE) suggests 35 degrees C is best.). 

For most installations domestic hot water needs supplementary heating. There are reasons beyond simple comfort for this.  (Note: gas hot water is usually 65+ degrees).  

Temperatures around 35 - 40 degrees C are the ideal temperature for growing Legionnaire bacteria. So additional water tank heating to 65 degrees C (using an immersion heater) to kill them off is an absolute necessity once a week even if you are happy with luke-warm hot water most of the time. (This applies to GSHPs too)

If you are changing your heating system to use a heat pump, changes have to be made to accommodate the low temperature output to the heating system. The user is recommended (HERE) to install underfloor heating. Or if they cannot afford that, then maybe they can install bigger radiators. DECC found the cheaper heat pump upgrade option (larger radiators) reduced the system efficiency by about 10%. compared to underfloor heating. 

Empirically (based on a sample size of nearly 400 units) the DECC study found costs associated with running a ASHP system were significantly more than that of a GSHP. They only draw on parr when the external temperature is around 10 degrees C or more. Which is, of course, at times when central heating is less likely to be needed. 

Both ASHPs and GSHPs are more expensive to run than a condensing gas boiler.

Incredibly, Greenmatch (HERE) even using a COP of 4.3 (!!) still found condensing gas boilers are cheaper to run! Imagine how the figures come out if you use DECC's most commonly achieved SPF(H4) value of 2.44.

Carbon Savings

ASHPs are less effective in cold weather than GSHPs. This inevitably will be reflected in their potential Carbon Dioxide savings against condensing gas boilers.  As a GSHP will save less than 2 tonnes of Carbon Dioxide per household per year compared to a condensing gas boiler it is difficult to see how an ASHP would save more than around 1.2 - 1.5 Tonnes.  

The average expenditure needed to prevent the emission of Carbon Dioxide (per tonne) gets compensated somewhat because ASHPs are cheaper to install than GSHPs. But I would suggest the gains and losses more-or-less average out and the cost will again be round £500 per tonne.

However there is the opportunity to  participate in the governments bribe Renewable Heat Incentive! So other people in essence will pay in part for your heating system. 

All of this for both GSHPs and ASHPs pre-supposes that the National electricity Grid will simply ramp up output to take over from gas if there is mass adoption of heat pumps.

Unfortunately most people do not realise how little energy the electrical grid provides to domestic consumers compared to that provided by the gas grid. Neither do they appreciate how a mass adoption of heat pumps (let alone EVs) will impact it. Or how much in total it will cost the country

That’s the subject of my last post in this series on Heat Pumps. (Here)

The Trouble with Heat Pumps Part 2

Last post (HERE) I looked at the overall cost of installing ground source heat pumps (GSHPs) and how much land was needed. I touched upon other issues too which I will expand on here.

The first and most obvious issue with domestic GSHPs is simply their incapability. A typical domestic GSHP has an heat output of 4KW - 13KW. The most powerful have an heat output of about 16KW.

Compare that to a standard modern condensing gas boiler that has a heat output of somewhere between 20 – 50KW.

This low output from GSHPs has a number of consequences.

    • The typical water output temperature fed into the heating system is less than 40degC. You can increase that. But if you do the efficiency rapidly decreases. ( a gas system typically produces hot water at 65 degC or more)

    • With a GSHP it is difficult to get domestic hot water for the bath/sink/shower up to an acceptable temperature. The usual fix is that you use a standard electric immersion heater to raise the temperature to an acceptable level. 

    • Because the output temperature is so low, the recommended usage for central heating is in under-floor heating. So factor installing that into the installation costs as well.

    • If you decide to ignore the under-floor heating recommendation and use radiators it is recommended you increase their size. Either way, underfloor or larger radiators - you trash your decor and need to redecorate. Factor the cost of that in too.

    • The system has to be running 24/7. You cannot allow the house to cool down when empty as it takes so long to heat up due to the low heat output.

   • When the system does reach temperature, as the hot water heating the underfloor system/radiators is at a lower temperature than a gas system, the system cools more rapidly and so tends to cycle on/off/on/off more frequently than a conventional system.

    • Every site (I have seen) that recommends GSHPs always encourages the owner to increase household insulation during installation (more cost). Meanwhile any cost comparisons they perform are with obsolete gas/oil/electric systems like this one taken from  (HERE)

So - Wheres the comparison with a new condensing gas boiler?

I have never seen a headline comparison of GSHP with (say) a condensing gas boiler system in an equally well insulated house. It is always old obsolete systems. I suspect the reason for this is because it is actually cheaper to run a modern condensing gas boiler system than a GSHP. (more later)

So, the take out from this is that:

    • On a like for like basis GSHPs are not as effective as gas boilers when it comes to heating your home. They can do it. But in reality, condensing gas boilers are more capable (and cheaper to run).

    • To get acceptable hot water temperatures while using GSHP you either compromise the lauded efficiency of the GSHP or use an immersion heater. Either way the overall system efficiency takes a nose dive.

     • You need to factor in a complete ground-up rebuild of you houses heating system with all the decorating and associated building/plumbing work. Your garden will be trashed and need to be re-layed. This will be on top of the cost of the GSHP installation. 

    • The system runs 24/7. It needs to do this as it will take a long time to heat up your home again if you let it cool down. So if you plan to solely rely on cheap Economy 7 electricity to drive the compressor – dream on.

    • There’s mountains of deception and propaganda being peddled by people and organisations promoting heat pumps. Make sure you get the all the figures and make sure their comparisons are honest ones (they won’t be).

Running Costs

OK let’s assume you have overcome the installation restrictions as outlined in the first post in this series. 

You’ve sold the kids into slavery and spent your £20,000 - £30,000+ on a GSHP plus associated rebuild of your heating system/redecorating/relaying garden.  Let’s say it works satisfactorily (some don't).

How much are you going to save?

Here’s a table from Evergreen Energy (HERE)

So from this rather optimistic table we find KW for KW a GSHP has just short of 4 times the efficiency of gas. So far so good you may say. What’s not to like about that? For one KWh of electricity used by the GSHP provides 4KWh of heating. If its gas we need 4KWh of gas. 

(As I'll show later this efficiency of 350% for a GSHP is wildly optimistic and does not stand up to scrutiny when compared to actual real data from a large installation base - but never mind for now. We'll run with it as-is)

The trouble comes when look at a typical gas/electricity tariff like this one. (Its mine by the way)

Notice the electricity price for one KWh is over six times that of gas. True you need a second standing charge which will slightly increase the gas price. But not by much.

So, let us assume the choice is between replacing an old gas boiler with a £2000 new condensing gas boiler or paying out £20,000 for a GSHP system and another £10,000 for the associated rebuild of your heating system, garden and decor.

At the end of the day (day-to-day running cost-wise) you would still be better off with the condensing gas boiler. 

Subsidies.

The government wants to entice you to spend your money on a GSHP. This is so the government can grand-stand about how “environmental” it is. As a consequence the government will issue you with a big fat subsidy if you install a GSHP. It’s called the Domestic Renewable Heat Incentive (RHI).

Now subsidy is a funny word. 

Many people think the word "subsidy" is actually an abbreviation for “somebody else’s money”. 

I couldn't possibly comment.

Even so, the subsidy, (which will be payable for 7 years) won’t cover the initial cost of the GSHP let alone the extra money you’ll pay out on rebuilding your heating system, or on enhanced energy bills. It's considerably cheaper to leave the bribe with the government and buy a condensing gas boiler.

Carbon Emissions.

Ah – right! This must be a slam-dunk for GSHPs. Surely no government would ever propose a “green” solution that was (well…) less than it was made out to be? 

To be fair this is one area that GSHPs does win out over gas. But not by as much as some would have you believe.

First let's visit what the real efficiency value is rather than the promoted value. 

Usually, the value promoted by advocates of GSHPs is the COP (Coefficient of Performance) and usually they use a COP value obtained in more-or-less ideal conditions. They then use this idealised value to figure out both savings and emissions for the whole year. 

First of all, if we want a realistic figure we shouldn't use the COP at all. We should use what is known as the SPF (Seasonal Performance Factor) which is roughly the performance you would get over a year rather than just at ideal conditions. We then need to ensure the SPF also includes the bits that the COP ( and heat-pump protagonists) studiously avoid. Like hot water immersion heaters and the need for other in-built resistive heaters in cold conditions to boost the sagging room heating performance of the heat pump itself. 

DECC did a study of several hundred GSHPs and ASHPs (Air Source Heat Pumps) in 2017. (HERE) 

They found the typical (median) SPF for a GSHP was actually 2.71. 

Here's the DECC graph for the distribution for H4 (H4 is the full input/output from the GSHP system rather than just a sub-system of it). The data we are interested in this post is the right hand bar graph.

If you want to understand the differences H1,H2,H3 and H4 for heat-pumps read THIS paper

So now we find we need just under 3.0KW of gas (condensing gas boiler) to match  1KW electricity used by a GSHP. Surely that is still (nearly) a 3 - 1 win? 

Well, no. You still need to factor in the carbon emissions from the electricity generation – and transmission losses for both electric and gas.

From Carbon Independent (HERE) we find that, after accounting for transmission losses and leaks, UK electricity has a footprint of 0.309Kg/Kwh and gas 0.203Kg/Kwh. So now we are down to less than 2:1. Which, to be fair is still a gain. For today at least. 

If you work it out it comes out at less than 2 Tonnes of CO2 saved for the average house over a year if the comparison is with a new condensing gas boiler.

The problem here is that this still ignores the main inherent issue with GSHPs. Namely the low power output. If people start supplementing their meagre GSHP output with electric or calor gas heaters and regularly bump up their hot water temperature with immersion heaters, all bets are off.

So (maybe) a gain. But at what cost? Somebody has to pay the £20,000 even if some of the cost is spread across society (including the poor) with the government subsidy.

So let us  assume the carbon dioxide saving is (optimistically) 2 tonnes per household and the GSHP lasts for twenty years without needing repair and only costs £20,000 to install. 

(Be aware that ALL rotating machinery needs care, repair and maintenance over time. The suggestion from the Green lobby that heat pumps last “forever” is simply absurd propaganda. )

The initial capital cost over 20 years averages at least £1000 per year assuming zero interest. So each tonne of Carbon dioxide saved has cost a minimum of £500 just in up-front capital overhead alone.

Which must be not far short of a record. 

You need a big garden for a GSHP.  So basically poor people need not apply. But big gardens usually come with rich people attached, ready and willing to claim the big fat subsidies. Even then they'll be out of pocket.

This government subsidy (like most renewable bribes) is in fact a Dennis Moore tax. I am sure we all remember good 'ol Dennis Moore. 

Next I’ll look at Air Source Heat pumps. 

It doesn’t get better. (HERE)