The BBC reports on a planning application submitted by Fulcrum Power to Plymouth Council to build a 20 MW diesel engine power station. This plant will operate backup for when renewables energy fails – mostly in the form of the wind failing to blow in the cold weather. Bishop Hill is, rightly, quite scathing because the diesel power is required to backup so-called green solutions. Josh weighs in with a cartoon
My posting is on the scandalous cost of this backup power station.
(Links are at the foot of the posting)
The BBC says
The application by Fulcrum Power is for a 20 megawatt (MW) Stor (Short Term Operating Reserve) power station on the former Toshiba plant at Ernesettle Lane, which company bosses said would cost “several million pounds”.
Its 52 generators will consume more than 1.1m litres of diesel a year, or about one tanker a week.
A litre of diesel with generate around 4kwh hours of electricity. (The normal measure is grams/kwh. A small diesel generator uses about 200 g/kwh and the RD of diesel is about 0.83 from memory). A 20 MW power station will therefore consume about 5,000 litres an hour of fuel. 1.1m litres will be consumed in just 220 hours, which means the plant is expected to operate for the equivalent of full power for just 2.5% of the hours in a year.
These companies will be paid a backup fee by the National Grid and then a rate per kwh generated. For this calculation I will look at just the cost per kwh. The fuel cost is easy. Diesel currently costs about £0.60 a litre, so that is £0.15 per kwh or 50% more than what I paid on my last electricity bill.
I tried to do some quick estimates and believe that the operating costs and cost of capital on “several million pounds” would be as much again. Being a little more curious, I did a search and found the “National Grid STOR Market Information Report No.19” on the National Grid’s Website. There is a bidding process every couple of months for Short Term Operating Reserve (STOR) capacity. Within the report is published the average winning and rejected bid rates. The most recent was season 8.6. As expected the bid is in two parts. First, a standby rate and second a (much higher) generating rate. There are bands, with the lower the standby rate, the higher the generating rate. I plugged the values into Excel and found that on all three rates Fulcrum Power could receive the equivalent of £0.65 Kwh. Gross Revenue would be around £2.86m. Deducting the cost of 1.1m litres for diesel leaves a contribution of £2.2m. There is probably a few hundred thousand of fixed costs, but payback on “several million pounds” looks to be pretty quick.
I have also done a check on other operating hours, shown below. The average in 2011-12 for STOR capacity was nearer 50 hours. At this level the revenue is much lower and more varied – from £1.66m to £2.12m. Dropping to just 5 hours per year still gives £1.34m to £2.04m.
Kevin Marshall
National Grid STOR Market Information Report No.19
ManicBeancounter 
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