Absolutely, as long as a the energy of a wind farm displaces enough MWh of gas to cover its capital costs (incl. network costs) at the marginal price of gas it should reduce system costs. But wind energy output across an area the size of the UK is so highly correlated that additional wind capacity has diminishing returns. I suspect that the UK is already beyond the point by which additional wind is economically beneficial, but I’m not certain about that.

Also, if gas utilization falls dramatically capital costs will come to dominate. It’s not just the turbines, the gas network is costly.

I've never seen a red light, but the UK has had multiple electricity rates for households since the 1980s.

https://en.wikipedia.org/wiki/Economy_7

My parents would set timers on the dishwasher, washing machine etc too run at night.

All EV chargers sold in the UK are now smart, and adjust charging schedule according to price.

The vast majority of UK consumers have a pretty simple plan where they're not demand responsive. If it's pitch black and dead calm one Winter's night they pay the exact same price as midday in the summer if it's blazing sunshine and simultaneously blowing a gale across the whole country. Their retailler has done some estimates and figured on average they can sell power for, say, 25p per kWh all day, every day. Some days they're raking it in 'cos they paid a lot less than that, other days they wish the day would end, but if their team did the sums right it comes out profitable at year end.

There are people, especially people with EVs and who can do that sort of "turn on a dime" lifestyle where you do laundry when it's cheaper not because it's Thursday who pay 0p per kWh some hours and 45p per kWh for that bleak winter's night.

For now that second group are a minority but they do exist.

The enabling technology is a bit more sophisticated than your French red lamp. "Smart" meters relay your usage constantly so you can be charged in 30 minute chunks, the same way the wholesale electricity market works. This also means you can see at a glance what's going on. So that's nice. The usual conspiracy people insist this is a future tool of control by government, just like almost everything that has ever been invented, bar codes on groceries, mobile phones, newspapers, parking tickets, everything.

This does not work at scale. Sure, there is plenty of anecdotes how you can successfully play this game as a consumer living in a rural house with electric car, power wall, and rooftop solar, but try to telling about it to someone living in a high-rise apartment or to a heavy industry business. Your preaching will fall on deaf ears.

IIRC there are several utilities in the UK which provide option to price electricity dynamically, but they are not popular because people do not want to play this game. They want reliable supply of electricity for reasonable prices. Trying to mold consumption to satisfy intermittency of generation is nothing more than shifting the externality akin to telling people "you must plant trees to offset CO2 emissions!".

The "actual cost" is a loaded term and probably cannot be known without putting reasonable bounds on it.

Nonetheless, two thoughts come to mind:

1) we don't know the "actual cost" of offshore wind

2) we may not be able to afford even the "market cost" of offshore wind without the natgas tax subsidy

> The actual cost has to price in the impact of using it.

Is there real evidence the collected tax revenue is actually offsetting carbon emissions?

There's a lot of fraud in carbon credit systems - where often the sole benefit is feeling and/or looking good.

Is this self-imposed tax actually having a real result - or is it just artificially increasing the price of energy? If the latter, then it's not really fair to claim it's the actual cost.

Yes, it is completely reasonable if you understand the concept of externalities.

> Is that unreasonable? Carbon dioxide is an externality, and it needs to be accounted for accordingly.

Yes it is unreasonable. Spending money to reduce carbon is just a subsidy for other countries who DGAF and will emit both theirs and yours.

>>Is that unreasonable

It’s not unreasonable to report the facts and let the reader decide. The carbon tax is a readily available fact where in your example is subjective.

>isn't going anywhere

That's not true at all, Reform could get in and remove it day 1!

The government is literally comparing a raw price with a price+tax … and what makes this even more disingenuous is that the government themselves applied this tax. AND the tax is absurdly high!

> The marginal producer makes no profit

This isn’t a farmers market where individual actors can swiftly respond to supply and demand. This stuff has decades of lead time, is full of regulations and thus long term imbalances.

Nor is this a case of marginal anything. Gas is almost TRIPLE the price [0]. A normal functional efficient market like you have in mind would adjust to that sort of enormous profitability differential, the uk market has not.

https://www.nationalgrid.com/the-great-grid-upgrade/fact-or-...

"Make any money" is not clear enough. Providers of input and purchasers of output have each become monopolies and have squeezed the profit out of smaller providers. They borrow to survive, government pays those that loaned the money, then the cycle continues. Farmer suicide has become a very popular way out of the cycle, which is one indicator that the money isn't really there any more.

I suspect GP actually wants an end to market pricing of energy and a move to a renewables-opex type of pricing, presumably with state financing and even operation. It isn't an insane idea: if it could be done cheaply enough and run well enough.

> Why would the 99% RE be forced to sell at a lower price?

You can just as easily flip that around: Why should the consumer pay a price that is entirely disconnected from the actual cost of production?

That's why "market" isn't a good approach for electricity.

The non renewable operator would be free to sell at a competitive price or not at all. Perhaps on nights when there’s no wind at sea they might be able to make their obsolete infrastructure pay for itself briefly.

It's an auction, it's called marginal pricing. Every producer bids for x KWh at a certain price (for each time slot), and the cheapest y KWh to cover all demand are taken, and all are paid at the price of the most expensive KWh bought. There is plenty of economic research on auctions and why this system is optimal: this system incentives to bid at the actual marginal cost of producing electricity, and thus allows to discover the optimal price. EU has been discussing about changing it, but there hasn't been a better system proposed yet. If you change to pay at the bid price, you'll have companies build teams of analysts to predict the market price and bit at that, they're not just going to accept being paid much less of what they could.

Instead of focusing on this, here a few more impactful things that would help: 1. Zonal pricing, so that there is an aligned incentive to build production where demand is (connection to the grid is a big limiting factor) 2. Stop providing contracts to renewable where curtailed production gets paid (curtailed energy is paid by consumers as taxes on bills normally) 3. Start allowing to build more renewable so that renewable are setting the marginal price 4. Push utilities to do PPA (power purchase agreements) with producers of RE so they can agree to a fixed price, and a smaller slice of electricity is bought at the auction

There are a few more, but these are the most important.

Regarding your edit: the gas plant is not subsidizing, the customers are paying. But of course at the moment building renewable is so lucrative thanks to this setup, that there is a big incentive to build them. Of course they need to plan for 20-30 years, and the risk of getting to big periods at 0 marginal pricing is real, so builders need to evaluate well the risk (and PPAs can help)

In a non-competitive world what you say would be true (you'd avoid filling in the remaining 1%), but there are a large number of power producers that a cartel is unlikely

It still looks like a perverse incentive to me. If I were operating a gas plant and charging too much, and also building out renewables, it naively seems that I should be able to continue overcharging for gas, lining somebody's pocket to maintain the contract, and building out more renewables for ever more profit. I'm not in the UK so I'm only passingly familiar with the existence of this policy; I do hope that it's got an offramp.

Edit to answer my own concern: But, reading this article, it does seem like the auction is the offramp. The government takes bids for enough power to supply the country, and once the auction is settled the worst-case cost is paid to all winners. So there's a hope that gas will eventually subsidize its replacement with renewables.

> Like if gas is $5 and RE is $1 the RE folks get $5 instead?

yes

if there's 1mW of gas in the grid then everyone gets paid the gas price

this is called pay-as-clear, and has some positives (strongly encourages RE construction), and some disadvantages (zero long term planning, paying gas generators absurd rates if they can squeeze in at the top of the auction)

UK government is consulting on changes to this system at present