Climate Change & the Environment


Frequently Asked Questions

In reality of course most of these questions have been asked only once. Some of them I made up.

Is it true that heat pumps don't work if it is too cold?

No, but they are less efficient. The heat has to flow 'uphill', so it's not surprising that the higher the hill the harder the device has to work. Even at temperatures approaching -30C though, heat pumps outperform oil and gas heating systems, according to research from Oxford University and the think tank Regulatory Assistance Project. More: Heat pumps still work when it is cold.

Is it true that solar panels do not work if it is too hot?

No, but they are less efficient over about 25C. If you have solar panels though you don't care too much about their efficiency, you care about how much energy you get out of them. You'll get the most energy on long summer days.

On 13 June 2023 the Telegraph reported that 'Britain fires up coal plant as weather becomes too hot for solar panels to work efficiently'. This was picked up (ironically) by the Sun, by pundits Andrew Neill and Toby Young, and tweeted by a DUP MP. The gory details are well-described in Private Eye (No. 1601, p11). The assertion was rebutted by the trade association Solar Energy UK: Solar power works best in summer.

Why does the price of 'green' electricity track the gas price?

The arrangements for trading electricity in the UK are called the British Electricity Trading and Transmission Arrangements (BETTA). Electricity is traded in half-hour settlement periods; in each period the grid will take the nuclear baseload, then any renewables that are available, then contract with other generators based on cost. The power, from whatever source, that meets the peak demand is called the Marginal Generation Unit (MGU) and it is that price that sets the wholesale price. It's nearly always gas, so the wholesale price tracks the gas price pretty closely: see electricity costs made simple. There's a video where a nice young man from EDF tries to explain it to us.

What sets the price of power?
Adding renewable power into the mix does help reduce the wholesale cost, but only in that without it the MGU would be a station lower in the merit order and would presumably charge more for its electricity.

I reckon that there is no such thing as green electricity, unless you generate your own - there is only one wholesale price, and we all get the same electricity as our neighbours, from the same substation. The premium that you pay for "green" is an incentive for your supplier to invest in renewables. Even if your supplier generates green electricity, why should they sell it to you at £x when they could sell it to the grid for £2x?

What would be interesting is to see a tariff that tracks the carbon intensity, settlement period by settlement period. That would mean that in any 30-min slot you would buy a mix of low-carbon electricity at one price and electricity from coal and gas at a higher price. This would only be attractive of course if you have the opportunity to move your demand, and can be bothered to do the sums.

Some economists (well, two anyway) advocate splitting the market into an ´on-demand´ market (I need electricity now) and an ´as available´ market (I will buy cheap renewables as and when they are available). This from the government's Review of Electricity Market Arrangements (REMA):

One key choice is whether there should be separate markets for variable and firm power. The most detailed proposal of this kind is Malcolm Keay and David Robinson’s ‘two markets’ model ... Splitting the market is primarily proposed as a solution to price cannibalisation, and the resulting price volatility (i.e. fluctuations between lower price periods of high renewable output, and higher price periods of low renewable output). Prices in the variable, ‘as available’ market would be set on the basis of the long-run marginal cost of renewables (i.e. factoring in all the costs of producing that unit of energy, including building a new plant); prices in the firm, ‘on demand’ market would continue to be set by short-run marginal cost (i.e. only factoring in the cost of producing an extra unit of energy, mostly made up of fuel costs). If this were successful, prices in both markets would be more stable and predictable, as both would tend to reflect the average long-run cost of the generators participating in them (because fuel costs make up a high proportion of the total cost of non-renewable generators). The CfD [Contracts for Difference] scheme currently isolates renewables and remunerates them at their long-run marginal cost; a split market would embed this approach into the structure of the wholesale market itself, and extend it to the demand side as well: both the lower cost and the variability of renewable electricity would be passed onto consumers in the ‘as available’ market, whilst consumers in the ’on demand’ market would pay a premium for the firmness of supply. Most consumers would participate in both markets but those who were able to flex their demand more could purchase a higher proportion of their electricity from the ‘as available’ market (though in practice, for domestic consumers, such decisions would likely be made by their supplier). For example, a consumer could choose a tariff under which they only charge their EV battery with ‘as available’ power, unless the battery is at less than 20%.

There´s an additional consideration, it seems to me, in that when there is a lot of ´as available´ power a lot of ´on demand´ plant is sitting idle, but still has to be paid for. Statements about the cost of renewables rarely include the cost of backup power.

REMA has a lot more in this vein, if you have the appetite for it. It has yet to report.