An 1 GW battery costing £1bn has been announced in Teesside. This will be capable of exporting about 3% of the UK’s electricity needs for 8 hours. The battery gets filled overnight from cheap overnight wind generation and discharges in the late afternoon getting paid the peak day rates. The owners could earn over a million per week like this, probably repaying their investment in 8-10 years.
The combination of wind and batteries is seen by many as the future of the UK energy system. Our electricity system demand averages just over 30GW, and we are heading towards having exactly this amount of wind generation, so all’s good when the wind blows. When it doesn’t, we need to use reserves that we stored earlier in batteries.
A GW of offshore wind capacity costs around £5bn, and a battery to store its power for 8 hours is £1bn. The question is how long we need to store the power for still periods, probably about 3 days, which means that we need 9 GW of battery, taking the whole package to £14bn per GW.
Let’s compare this to nuclear power, the HPC plant will generate 3.2GW at a cost of around £40m or £12.5bn per GW. Not so different, but weren’t renewables supposed to be cheaper?
This means that we are heading to a system where all energy costs roughly the same to produce (assuming the cost of running offshore wind and nuclear power are low in comparison to the cost of building them and they are roughly the same).
A renewed UK energy system based on wind and nuclear could cost around £500bn, we need to finance this over 20 years which means that the real cost will be closer to £1tn, or £50bn a year. This is more than the current system costs.
So, we need to stop telling people that future bills will be lower. But there are two huge advantages from this scenario, firstly we stop polluting the planet, and we move our energy system to one based on the cost of capital rather than the international price of gas.