The Rt. Hon. Jacob Rees-Mogg
Secretary of State for Business, Energy, and Industrial Strategy
House of Commons
Dear Secretary of State,
Yesterday, all over Northern Europe spot electricity prices collapsed as the wind blew and the sun shone. Solar and wind contributed nearly 2/3rds of energy generation in the UK and Germany.
However, for most of the year, power prices have been at record levels, with the contribution of renewables on average just 1/3rd of yesterday’s level, and on many days almost zero. Last year, there were just 7 days when variable renewable energy contributed more than 50% of UK grid power but also 16 days when it contributed less than 10%. See blog.argonautcapital.co.uk/articles/2022/04/29/wind-overbuild-why-more-wind-wont-work. The constraining factor wasn’t the degree of existing renewable power generation capacity but the capricious weather.
Yesterday, the UK’s National Grid warned of power black outs over the Winter.
Far from being a triumph of renewable power yesterday’s good news of temporarily cheap electricity during an energy crisis highlights the fatal flaw in wind and solar power, its intermittency.
The volatility of power prices will only get worse the more wind and solar power generation capacity is built. Since we already have cheap power when the wind blows and the sun shines (See Fig 1. German and UK spot Power prices 2022) exactly what is being achieved by the UK’s plans to double or triple weather dependent renewable power generation capacity?
Fig 1. German and UK spot Power prices 2022
It is time to recognise that we cannot get the wind to blow or sun to shine more consistently. And that when the weather is favourable, we already have enough generation capacity to power our grid.
Over-building wind power - at the huge cost of government guaranteed contracts and damage to the environment - in the hope that one day large scale industrial batteries or green hydrogen become technically or economically feasible is leaving energy policy to the fairies and unicorns. See blog.argonautcapital.co.uk/articles/2022/03/14/the-wind-trap-why-wind-power-has-already-peaked.
We must also recognise that wind and solar power generators are currently protected from their own intermittency through guaranteed government imposed CFD or ROC price contracts. There is no penalty for producing power when it is least needed, which would exist under a free market. Wind and solar producers therefore have no incentive to solve intermittency problems, which will leave the taxpayer with a higher bill and the UK with an even more dysfunctional grid.
We call on the UK government to pause all new wind and solar energy projects, pending an official enquiry into intermittency and our ability to usefully store excess energy generation on windy and sunny days.
Fund Manager & Founder
1. German and UK spot power prices this year (excel attached). Note these have been as high as €800 or £600 per MW but also on some days negative
2. Links to power generation mix in UK (grid.iamkate.com. In the UK wind yesterday was 46% UK Power and Solar 13%: it’s a bright windy day, so renewables yesterday were at 60% power generation (but the average over the last year is around 25%)
3. Links to Power generation mix in Germany www.bdew.de/service/anwendungshilfen/die-energieversorgung-2021 In Germany wind yesterday was 25GW and solar 25GW (50 GW) out of total 75GW), so renewables 2/3rds daily power. The average over the last year is 15-20 GW (25%).