Comment on Energy bills to tick lower this winter but will remain high
bernieecclestoned@sh.itjust.works 1 year agoTheir unit cost is zero?
Capex is huge, and there will always be opex for repairs and maintenance. The blades and motors etc all have to be replaced regularly.
Solar output is also much less during winter
My new boiler can run a hydrogen mix and all the UK metal pipes are being replaced with plastic inserts so at some point green hydrogen could offset natural gas and that itself could be replaced eventually with syngas from biofuels.
hellothere@sh.itjust.works 1 year ago
Apologies, I meant to say Next Unit Cost, didn’t spot the missing word. As in the cost to produce one more unit of electricity. This measure ignores capex and is just opex plus associated usage costs like amortised wear and tear, depreciation, etc.
It’s near 0, but not 0, because the input (wind, sun) is free, whereas gas (for CCGT) is not. As such renewables can sell in to the grid, profitably, at lower prices than fossil fuels can.
The big problem, as you show with the example of cloudy winter days, is disconnecting generation from usage, via storage.
Green hydro (or blue hydro, made via electrolysis of sea water) is a useful step for retrofitting, but not something - in my opinion - that should be considered for new builds.
bernieecclestoned@sh.itjust.works 1 year ago
Ah, yes. But we can’t actually ignore capex, because most of the fossil fuel infrastructure is sunk cost.
Renewables are net new capex, which needs a return. The reduction in cost of renewables is the best thing. A barrel of oil isn’t going to get any cheaper to pump out but wind and solar will. The war is already won, we just haven’t seen the benefits yet.
I think green hydrogen would help smooth the peaks of renewables but it’s not very efficient, probably a better use is making ammonium nitrate for fertiliser or as a replacement for heavy oil for shipping
hellothere@sh.itjust.works 1 year ago
Context of the situation is important. You can’t use them interchangeably.
Capex does not matter when we are talking about choosing to generate using existing infrastructure, because capex amortisation is the same regardless of whether you’re generating or not. Choosing whether to generate at 1am on a random Tuesday has nothing to do with your previous capex, but everything to do with your next unit cost. If price is higher than cost, you’ll generate, it not you (probably) won’t.
Capex payback is important when businesses are evaluating building new generation. The spot price at 1am on a random Tuesday has nothing to do with whether you’re choosing to build new infrastructure. What does matter is average unit prices, over time, not one data point.
bernieecclestoned@sh.itjust.works 1 year ago
But you said you wanted more renewables… That’s capex.