Cost of living: Will switching to renewable energy save us money on our energy bills? | UK News

Figures from Sky News suggest the cost of generating power from wind will be less than half the cost of gas this year, falling to a quarter by 2023.

Just yesterday, the Prime Minister told wind industry leaders he had “an insatiable desire to continue to maximize the supply of wind energy”. Part of its long-term energy strategy to reduce dependence on fossil fuels – something he believes has become more crucial since Russia’s illegal invasion of Ukraine.

And the day a normal energy bill increases by more than 50%, pushing more than a quarter of households in England into fuel povertythe fact that wind is cheaper is more important than ever.

Wind is already the second largest source of energy in the UK and has increased nearly twentyfold in the last 10 years.

While the environmental benefits of wind energy have accounted for most of its rise so far, the political and economic benefits are key to why plans are now being accelerated.

Using less gas would not only wean us off our dependence on foreign fuel supplies, but also limit how much our energy bills are affected by global gas and oil prices.

Wind is now cheaper than gas

Wind power became cheaper than gas for the first time late last year, according to Rajiv Gogna, an energy analyst at consultancy LCP.

“Last year existing gas plants would charge around £50 per megawatt hour (MWh) for the energy they produce, but this year it will be around £200/MWh and we expect that to be around the same in 2023. ‘ Mr Gogna explained.

One MWh is enough to power a home for about 10 weeks or drive an electric car 3,600 miles.

“The cost of energy from new wind farms will be around £70/MWh this year and contracts have been signed to bring it to £50/MWh in 2023.

“In 2015 it would have been around £140/MWh and last year the cost of new wind farms was around £90/MWh.”

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The way how expensive it is to produce energy from different sources is called the “level cost of energy” – it takes into account all the different costs that occur over the lifetime of an asset and how much energy they can supply in that time .

These are the costs of building the plant, including the cost of borrowing, as well as the maintenance, delivery and operating costs and, if applicable, the fuel.

For gas and wind stations we look at completely different calculations.

When it’s windy, costs are paramount. It’s all about how much it costs to build the turbines – there are some maintenance costs, but the fuel is free. With gas, the fuel is much more important.

Technological advances in recent years have meant that larger and more efficient wind turbines are cheaper to build. Meanwhile, gas prices have moved in the opposite direction, due in part to supply problems caused in part by Russia’s actions in Ukraine.

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Can renewable energy replace UK gas needs?

Why are bills still high?

At the moment it’s hard to see how cheaper energy from wind will help save on our energy bills, and this has in part to do with how the National Grid buys the energy we use.

The National Grid has sophisticated models that predict how much energy the country will need for a given half-hour period based on habits we know, such as heating up.

The grid then buys energy using the cheapest suppliers to meet that demand.

Using the cheapest suppliers means they first buy from renewable sources – wind, solar, tidal, etc. – and then move on to nuclear and the most efficient gas suppliers, before resorting to the most expensive gas and coal suppliers only if there are any left there is demand.

In fact, we pay the total cost of it by weighing the cheapest energy sources against the most expensive. The costs are borne by the industry but ultimately passed on to the bill payers.

In addition, we still pay for electricity from older wind farms at the more expensive tariffs at which they were built.

dr Simon Evans, deputy editor and policy editor at climate publication Climate Brief, says: “Renewable energy mitigates the bills a bit because it reduces our use of the most expensive gas and coal.”

“They saved the equivalent of about £10 on bills last winter and would have saved about £100 if we had already built the wind and solar farms that are under contract or likely to have orders in the summer.”

“But the wholesale price of gas is still the most important factor in determining the price we pay – it’s caused about 90% of the increase in bills.

“If we had more renewables, they would reduce the higher bills more.”

Despite the complicated payment process, people’s bills are already being slightly improved thanks to renewable energy, and more will become more noticeable in the future. But that doesn’t answer the supply question.

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Can we rely on renewable energies?

What happens when the wind doesn’t blow?

In recent years, energy supply has been relatively predictable. The National Grid can reliably predict how much energy a given gas or coal-fired power plant will produce per hour and match this to energy demand.

Now the UK is using more wind, supply is less predictable in the short term.

Just as the country is unable to control global gas and oil prices, neither does it have much control over the weather – how strong the wind blows or how strong the sun shines.

On 29 January this year, wind was responsible for the UK’s highest ever daily energy production – 409,107 MWh. It was more than half of all the energy used in Britain that day.

On days like this, the grid can avoid buying from the most expensive suppliers, lowering overall energy costs.

But on Jan. 25, just four days before that record performance, the winds had died down and the grid was able to buy less than 100,000 MWh — a quarter of what it bought on Jan. 29.

So it would have had to reach some of the more expensive suppliers to meet demand, driving up the overall cost.

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Orkney is a leader in renewable energy

Gas and coal suppliers, who are usually not switched on, demand the highest tariffs, among other things because it is expensive to cold-start the stations and they have to be on for a certain period of time for safety reasons. But also because those selling the energy know that times are desperate and they can get away with asking for more.

One solution to this is the ability to store energy from wind and sun when more is being produced than can be consumed at the time.

Storage is usually either in batteries or in the form of hydrogen, which can be extracted from the water while the turbine is running and stored for later combustion.

These storage options can be expensive — so moving to a renewable system that can handle cold, quiet, and dark periods could still be costly even if the “fuel” is free, but Dr. Evans says such a system would still be cheaper overall.

“Because wind and solar are so cheap, the overall cost is lower, even if you pay to store and build the storage technology.

“Prices will fluctuate more hourly than now, but average costs would still be lower than now.

“The way consumers are paying for and using energy right now means the hourly changes won’t be as noticeable – you’ll just see the overall price go down.

“But we may get to a point where we can set smart chargers to charge your electric car only when the wind is strong and sell energy back to the grid when it’s not.”

the data and forensics team is a multi-skilled entity dedicated to providing transparent journalism from Sky News. We collect, analyze and visualize data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite imagery, social media and other open source information. Through multimedia storytelling, we want to better explain the world while showing how our journalism is done.

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Cost of living: Will switching to renewable energy save us money on our energy bills? | UK News

Source link Cost of living: Will switching to renewable energy save us money on our energy bills? | UK News

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