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Andrew Montford: The Car Crash Of UK Energy Policy

Gerard Wynn, writing at Reuters, tries to explain the effect that wind generation will have on electricity grids in Europe. The point he’s getting at is that because wind and solar (a) have zero marginal cost and (b) are vastly subsised, they will displace gas (and coal) when they are available. That means that gas and coal have to recover their fixed costs and make their profit at times when wind and solar are not available, rather than 24/7 as previously.

The effects could be scary. No, make that terrifying:

Britain’s Department for Energy and Climate Change (DECC) has estimated that prices would have to rise to as high as 10,000 pounds ($15,700) per megawatt hour (MWh) for short periods, from an average of around 45 pounds. Prices in Britain have historically never exceeded 938 pounds per MWh.