The Major Energy Users Group reminded us yesterday about one downside to our dependence on renewable electricity generation - high spot prices.
“The flaws in the policy to ban new thermal power stations are being graphically illustrated by current high electricity spot prices,” said Ralph Matthes, Executive Director of the Major Electricity Users’ Group (MEUG).
“Yesterday provisional spot prices at Haywards averaged 19 c/kWh. These are extremely high prices reflecting relatively tight supply. Yet there was no security of supply risk yesterday, just generators pricing their output to reflect current and possible future scarcity. The existence of unreliable and intermittent renewable generation such as wind did not mitigate the high spot prices.
“The prolonged sequence of extremely high spot prices since the start of the year will flow through to higher financial derivative prices and retail prices. Major power users’ with spot exposure are hurting today. In the near term smaller commercial and household consumers will feel the cost of current high spot prices.
Matthes concluded by commenting
“The evidence that relying on more renewables rather than a mix of generation types will lead to extreme spot prices and the need for inefficient peaking thermal plant is happening almost everyday with the current prolonged summer weather. Government needs to heed the signs and urgently rethink the proposed ban on thermal generation”
