back to article Schneider Electric warns of future where datacenters eat the grid

Policymakers need to carefully guide the future consumption of electricity by AI datacenters, according to a report that considers four potential scenarios and suggests a number of guiding principles to prevent it from spiraling out of control. The research published by energy infrastructure biz Schneider Electric follows the …

  1. druck Silver badge
    Stop

    The Energy Crisis model is the only realistic outcome.

    We just don't have the resources to waste on statistical bullshit generators.

    1. Neil Barnes Silver badge

      If only there were some sort of device that could limit power consumption of such places... say, a fuse. Or a big 'off' switch.

      1. bombastic bob Silver badge
        Megaphone

        "Energy Crisis model" => limit power consumption

        IF ONLY people recognized that the "Climate Scam / Climate Cult" NONSENSE and "renewable energy sources" FANTASY were a COMPLETE LIE and fossil fuel and nuclear power generation are the ONLY things that REALLY make sense, then we would have *NO* "energy crisis" for which to give up our money, freedom and technological progress to "SOLVE"...

        Article: It also suggests accelerating deployment of on-site renewable energy generation combined with advanced energy storage solutions

        You LITERALLY can NOT produce enough power with so called "renewable" energy sources, many of which POLLUTE and consume FOSSIL FUEL RESOURCES to make them "over there" (read: China), just so that GREENIES can FEELZ GOOD about it "over here", at levels possibly HIGHER than the 'renewables' allegedly "offset". And putting "everyone has an EV now" demand on the grid is UNDOUBTEDLY WORSE than anything AI could demand.

        That's just the laws of physics in a REAL WORLD, ya know? Run the numbers, you'll see.

        If you need MORE TRONS, then MAKE THEM! Build a nuke or fossil fuel plant next to the data center. Natural gas turbine would do NICELY. And maybe cover building roofs and parking areas with solar panels [that are NOT made by the CCP] to supplement the grid, where it kinda makes sense! [after all, why not!]

        1. LybsterRoy Silver badge

          Re: "Energy Crisis model" => limit power consumption

          I wonder how many of the downvotes were because Bob's a bit shoutie and how many because you disagree with his logic? Can the latter please give reasons.

          1. David Hicklin Silver badge

            Re: "Energy Crisis model" => limit power consumption

            I wonder how many of the downvotes were because Bob's a bit shoutie and how many because you disagree with his logic? Can the latter please give reasons.

            Both

            Climate Change is real and we are starting to feel it already, however some governments are rushing headlong into renewable/electric cars/heat pumps without proper consideration of their limitations and costs - especially for those who are already on or below the breadline due to the massive inflation and minimum wage economies that we have - I am especially looking at the UK where it live here but the rest of Europe is not doing much better.

            Renewables etc have their place, once built they stop adding emmisions to the atmosphere (and fossil fuel based solutions also cost emissions to build remember so that argument is a fallacy) but a more balanced and less frantic approach is needed.

          2. Andrew Scott Bronze badge

            Re: "Energy Crisis model" => limit power consumption

            Shoutie but when you see that from someone who claims they have the "numbers", I'd like to see the numbers and the sources from him before paying more attention. figures don't lie...

    2. Like a badger
      Boffin

      The Energy Crisis scenario will be true for the UK and EU; It won't matter to countries willing to build new CCGT or coal. Whilst comprehensive new nuclear could meet Europe's hopes for new high volume, low emissions power, it is neither affordable under current European regulatory and operating models, nor can it be quick enough to have a material impact (especially as France will need to retire a lot of existing nuclear capacity through the 2030s).

      Which brings me to the conclusion that it will be those countries willing and able to build new generating plant at scale and speed who will be the locations where AI gets developed. More so where government backing ensures that regulation does not hinder new development, and that financing can be offered even if the business case doesn't look commercially investable. So that means China.

      None of this matters if AI is in fact just the latest crazy hype wave that will eventually break, leaving a few niche benefits and a lot of investors with huge losses. But if AI is in fact the future of technology, then it seems that the European obsession with net zero will condemn the continent to miss out on AI; Whether the US will be willing to build new generating capacity in the volumes implied by the AI enthusiasts remains to be seen. Whilst you might assume the Orange Bloater won't care about environmental treaties, I suspect the US will quickly run into political problems if AI build out hoovers up available capacity margins and pushes up energy prices, and even where permitted the build time for new plants will be long.

      1. Wang Cores

        You assume the USerfs will be allowed to complain? brave.

        1. Anonymous Coward
          Anonymous Coward

          Good lord, no! It'll be Trump's cabinet of billionaire mates who complain, because their businesses in whatever (eg building cars, launching rockets, running social media platforms) will be incurring much higher costs and

          1. LybsterRoy Silver badge

            You have described one mate. Who are the others?

      2. Anonymous Coward
        Anonymous Coward

        The sooner we educate people on nuclear waste and how it isn't endless truck loads of green goo filled barrels, the better.

      3. bombastic bob Silver badge
        Megaphone

        carbon-based fuel power plants in the USA

        Whether the US will be willing to build new generating capacity in the volumes implied by the AI enthusiasts remains to be seen.

        It WILL happen. It's a BIG REASON why a majority of US'ians voted FOR our next Prez.

        "Drill baby drill". I would NOT be surprised to see DOGE and Trump getting Con-Grab to ELIMINATE the EPA!!! At the very least, ALL policies attempting to regulate CO2 will GO AWAY, perhaps even for NATIONAL SECURITY reasons. It is INEVITABLE. Americans by FAR are REJECTING the Climate Scam! And we want our PROSPERITY BACK!

        1. A.A.Hamilton

          Re: carbon-based fuel power plants in the USA

          It looks like your keyboard is in need of a service - it keeps getting stuck in CAPS LOCK mode in a most inappropriate fashion. Maybe try a powerful can of compressed air - it's much better than hot air.

        2. Telman

          Re: carbon-based fuel power plants in the USA

          What is this "we"??

          Less than 50% of the voters voted for Drumf. You want your prosperity back? Maybe you shouldn't have supported someone who is pushing import tariffs and planning to fire the head of the Federal Trade Commission..........

      4. joed

        If only the sources of electricity depended just on availability of coal or nuclear isotopes. Let's not forget that nobody really wants smokestacs or nuclear reactors in their backyard (power plants are expensive). Power transmission is another issue. And then there's an issue of water scarcity. It's needed for both power generation (nothing has changed here, it's just primitive other than more efficient turbines) and data center cooling. If only the AI could put food on our tables. I'd rather have electricity supplied to my fridge that AI blowing hot air at me.

        1. LybsterRoy Silver badge

          I don't know how much space a SMR would require but there's some waste ground next to my house they could put one on - much prefer them to do that (as long as I get free leccy) than have a wind turbine.

          I think once (if ever) they get SMRs working they need to look at micro-nukes - stick one in the back garden.

      5. Tron Silver badge

        The AI bubble will likely deflate before it gets too bad.

        Somewhere there will be a shiny data centre that gets built but never gets turned on as it simply became economically unviable and technologically obsolete.

        I would add that although politicians aren't very bright and are happy to ignore the environmental impact in the rush to permit data centres, chasing the tech buck, even the dumbest back bencher knows that one of the fundamental rules of politics is that when the lights go out, the government will follow. No government will ever survive not having enough power. That's why they are all counting 'thermal recycling' as 'green', burning waste and forests in power stations from the UK to SE Asia. They cannot fail to provide power and survive in government. If push comes to shove, they will turn the data centres off.

    3. Anonymous Coward
      Anonymous Coward

      We don't have the technology to store the huge amounts of energy all around us all the time to use on statistical bullshit generators

      FTFY

      Energy is not scarce, we're just dumb chimps that don't know how to capture and store it properly...some of us are even dumber, greasier, flip flop wearing chimps that prevent the less dumb chimps building better technology.

    4. Anonymous Coward
      Anonymous Coward

      In short, all this report is saying is "Energy is too cheap". If companies are prepared to pay for the energy and hardware costs of these AI workloads, then presumably they must in the long term generate sufficient revenue, and hence business value from the end-users, to justify the cost.

      Of course, this may not be true in a pre-bubble-burst, land-grab scenario. But in that case, the bubble will burst eventually, and the problem will self-correct itself.

      In the event of inexorable rises in demand for electricity, then the price will rise until demand falls (or more supply comes online to take advantage of the higher price). It remains to be seen who blinks first: the data centres stop running AI and Bitcoin, or families sit in the dark and the cold.

    5. david 12 Silver badge

      It's actually labeled "Energy Crunch". The scenario is not a crisis, it's a projected drop in AI utilization because of rising supply restrictions.

  2. nautica Silver badge
    Meh

    "“People worry that computers will get too smart and take over the world, but the real problem is that they’re too stupid, and they’ve already taken over the world.”

    – Pedro Domingos, University of Washington.

    1. ecofeco Silver badge

      Exactly.

  3. Howard Sway Silver badge

    research published by energy infrastructure biz Schneider Electric

    Energy infrastructure supplier issues report predicting massive need for new energy infrastructure. Let me have an educated guess here that the report contains a load of numbers pulled out of thin air and shoehorned into scenarios that by an uncanny coincidence all see lots of money being spent with the company that wrote the thing. I would also bet that it contains not a single fully worked through example of how millions of people are going to be regularly using AI to do specific tasks as part of their daily lives, because nobody else has managed to supply many convincing use cases for it yet either.

    1. In total, your posts have been upvoted 1337 times

      Re: research published by energy infrastructure biz Schneider Electric

      Are you kidding? It will do your TPS reports for you!

      1. Scotthva5

        Re: research published by energy infrastructure biz Schneider Electric

        Until the cover sheet changes then all hell breaks loose.

  4. Phil O'Sophical Silver badge
    FAIL

    No surprise there

    This, combined with successive governments' heedless rush towards electric everything, without proper infrastructure planning, is likely to create a situation where energy consumers have no choice but to install their own generation equipment. The result is that 20 years from now we'll have a dirtier and less environmentally-friendly energy infrastructure than we have today.

    Of course, that won't stop the government from claiming that we have a world-beating clean energy network, by looking only at the public grid and ignoring the vast private systems which will have become necessary.

    1. Like a badger

      Re: No surprise there

      Fairly easy for government to introduce new rules on emissions that will address "private wire" systems, and some rules they are happy to introduce retrospectively.

      But you're right, no proper system planing, a madcap insistence on a "market" system for electricity when all the rules are made by government and energy users have few if any choices, and what we can say (because in the UK we're already on this road) is that the outcome of this decades long failure of energy policy will be much, much higher energy prices. As of the latest numbers from the UK government, our domestic energy prices are already the highest in the IEA, and a staggering 79.9% above the IEA median. For industrial users, they're also paying the highest prices in the IEA, but "only" 46% more than the IEA median.

      Given the government's laughable ambitions in AI, one might wonder how they expect the UK to be a desirable location for anything when companies pay prices like this. If I were planning any energy intensive activity (AI or real industry) I would be thinking of countries like Norway or Sweden at 7-8 p/kWh long before the UK at nearly 26 p/kWh. Our most obvious European competitors of France, Germany, are all near enough the IEA median of 17.7 p/kWh, so UK business pays a staggering 9p/kWh more than their EU bretheren. And I know it'll disappoint many, but this difference has nothing to do with Brexit or trade barriers, it has to do solely with the UK's idiotic energy policy.

      And all the while we have our governments committing to even more regulation (like the panic to phase out ICE cars, and the soon to impact scandal of banning gas boilers) that will worsen cost of living pressures, idiotic ideas like that plonker Milliband's scheme to throw billions at stupid, stupid, pointless solar power toys. Much of the cost of the solar madness will be added to energy bills through a range of supplier obligations, and all this before Hinkley Point effectively sets the cost of baseload at somewhere north of £90/MWh.

      The cost of UK energy policy is a scandal that eclipses all of the many other failings of Britain's government. It depresses UK living standards, limits growth, sucks capital out genuinely productive uses, and forces many people into fuel poverty, it ensures we remain reliant on imported everything (from countries often with much higher emissions) yet you'll see none of this adequately covered by any news source, and politicians are too dim or self interested to address this ongoing calamity.

      1. werdsmith Silver badge

        Re: No surprise there

        The phasing out of ICE car sales is not a UK government unilateral thing. It is something that is being done co-cooperatively across all the developed nations. They all have broadly similar target dates.

        The primary purpose of it is not only to replace all the ICE cars. We will be fine to continue operating them as long as there is a source of fuel for them, I expect the work involved in keeping the current fleet running will be excellent business for the garage industry and the reconditionners. The law really affects the manufacturers wishing to sell new cars and its purpose is to stimulate and force development.

        1. Anonymous Coward
          Anonymous Coward

          Re: No surprise there

          I think you'll find that phasing out ICE cars affects anybody who wishes to buy a new car, not just the manufacturers, and the policy makers have only just realised that (a) electric vehicles are and will remain more expensive than ICE cars for a good while yet, and (b) the demand to buy new EVs lags considerably behind the policy wonks' plans. They haven't yet realised that (c) the grid in the UK and more than a few EU countries will struggle to support the number of EVs they think should exist.

          Of course, if the plan is to force the proles out of cars and onto buses, freeing up the roads for wealthy EV drivers then the policy will be a resounding success.

          1. werdsmith Silver badge

            Re: No surprise there

            I think you'll find that phasing out ICE cars affects anybody who wishes to buy a new car,

            What is stopping anyone who wants to buy a new ICE from buying a new ICE if they have the cash?

            I'm talking about forcing the development of new vehicles. This has to be done ahead of the actual date of the ban.

            And do you really think that the policy makers are unaware of the capacity of generating and distributing electricity? Honestly and objectively answer.

            People are tripping over themselves to start whining about EVs, they are virtually hallucinating reasons.

            1. Like a badger

              Re: No surprise there

              "What is stopping anyone who wants to buy a new ICE from buying a new ICE if they have the cash?"

              Unless the government change their idiotic policy, car makers will stop selling ICE cars because the fines for selling more than the government will allow are draconian.

              "And do you really think that the policy makers are unaware of the capacity of generating and distributing electricity? Honestly and objectively answer."

              Well, I spent over a decade working in the strategy teams of a couple of the UK's largest energy suppliers, I've worked on policy issues, I've even been seconded to a government department to help implement a flagship policy (that flopped), I've been one of many, many consultees on National Grid's FES, I've been part of industry working groups on decarbonising the grid. I understand the problem, I can see some of the possible solutions, and I can assure you that UK energy policy is an ongoing and expensive disaster. The tone of your questions seems to imply some belief that the policy is broadly correct and some optimism that it will all work out in the end. I don't share those views.

              Individually some policy makers are aware of the issues, but as a collective group the policy output (which to be fair is the sum of decisions made by politicians, not the policy wonks of the civil service) amounts to a head-in-the-sand obstinacy that says that the UK needs to bankrupt itself to win the net zero race, that "markets" driven by subsidy are in fact still functioning markets, and that decarbonising energy is just part of some international dick-swinging contest that we must win. As a consequence there is no joined up thinking, no proper system level modelling and planning, and government randomly yanks at the levers of subsidy in the hope that will solve the problem. Our comparative energy prices I've mentioned in another post should really be evidence that something is catastrophically wrong with UK energy policy, if you disagree with me about the cause, what is your belief as to what is wrong here?

              As a further example of how energy policy operates in a vacuum, energy is now a different department to business (ie separate ministers), the energy minister is Ed Milliband has the political dosser's degree (PPE), and no real world work experience, so he doesn't understand anything useful even though I suspect he hopes he's doing the right thing. The business ministers are actually pretty good, but the recent Industrial Strategy failed to address the catastrophe of two plus decades of failed energy policy - not a mention of our economically suicidal energy prices, but lots of waffle about the challenge and opportunity of climate change, bemoaning that other countries have more renewable energy jobs than the UK. Of course they do, because decades of anti-industry policies have hollowed out our engineering and manufacturing base, and with high energy prices nobody sane is going to move any manufacturing to the UK.

      2. Anonymous Coward
        Anonymous Coward

        Re: No surprise there

        Fairly easy for government to introduce new rules on emissions that will address "private wire" systems, and some rules they are happy to introduce retrospectively.

        If I had to choose between letting my business fail, or ignoring the rules and installing a generator, I'd go for the generator and let the lawyers fight it out.

        1. Anonymous Coward
          Anonymous Coward

          Re: No surprise there

          Depends on where you live, but in the UK and I suspect most of Europe, if you are in breach of (for example) medium combustion plant rules, then the local regulator has considerable powers to levy the sort of fines that will make any business think twice.

          Although there's nominally a scale of penalties that tops out at £3m, in this example case the UK's Environment Agency has powers in law to issue non-compliance penalties (without using the courts) that are unlimited in value.

    2. Anonymous Coward
      Anonymous Coward

      Re: No surprise there

      "private systems which will have become necessary"

      I suspect if that were to ever become a thing, as unlikely as it is, it would likely be small nuclear reactors buried underground or more likely businesses just relocating to places like Canada...there isn't enough land available to build lots of small scale fossil burning plants and locals would likely complain about the emissions.

      Plus, considering the NIMBY factor..."muh view from muh kitchen"...they will probably care less about a hidden nuclear generator than a very visible diesel / gas / coal facility and all the trucks delivering fuel.

  5. codejunky Silver badge

    How about

    Surely we are missing a trick here. Big business want to spaff money at this AI boom. The AI boom requires actual power generation. Various governments have failed in power generation instead focussing on monuments to a cult. And people think this AI boom will bust-

    Make it quicker and easier for businesses to build power generators for their data-centres! When the boom goes bust there will be spare power generation and we can bin the unreliables.

    1. Anonymous Coward
      Anonymous Coward

      Re: How about

      I've a better idea:

      Redefine the electricity "market" so everything is not pegged to the price of gas.

      1. codejunky Silver badge

        Re: How about

        @AC

        "Redefine the electricity "market" so everything is not pegged to the price of gas."

        Why not. But the only reason it was pegged to the most expensive supply was to make wind and solar viable on the grid (in the UK). Hell it took trade policy of the west and economic policy of the UK to make gas so expensive here anyway.

        1. Like a badger

          Re: How about

          Wholesale prices were never "pegged to gas", rather it was that gas powered CCGT was the biggest single source, and was and remains the most flexible source. Strictly speaking the wholesale electricity price is set by the price demanded by the last marginal generator needed to meet demand, so much of the time that is gas, at times of peak demand it's oil fired generators or similar.

          There's no need for government to "make wind and solar viable" because that's not how government controls the market. It simply obligates the grid to take or pay for any renewable output, and obligates suppliers to buy increasing volumes of renewable power. The latest ruse is starting to replace supplier renewable obligations, but has the same effect - government agrees a "strike price" with renewable generators, and then signs a contract for difference that promises to ensure they get that strike price. If, as is likely the case, the wholesale market is below the strike price, then the cost of the subsidy is recovered through levies on energy suppliers who add it to your bill.

          Of course, as more renewables get added, gas CCGT and other sources run less often. But because they're still needed when renewables are delivering, then they need further subsidies through the capacity mechanism (again, added to your bill). An interesting case in point of how renewables aren't reliable was 24 to 27 December, when we had stuff all wind and heavy overcast, so renewable output was SFA and the only thing keeping the lights on was CCGT. Similar scenario 10-13 December and 3-4 December, so not exactly infrequent.

          1. Anonymous Coward
            Anonymous Coward

            Re: How about

            Strictly speaking the wholesale electricity price is set by the price demanded by the last marginal generator needed to meet demand, so much of the time that is gas

            That rule was brought in when the last marginal generator was wind, and it was effectively a subsidy so that wind wasn't simply squeezed out of the market on price grounds. The increase in wind-generated supply and the great increase in gas prices, has completely distorted the market, but neither the previous nor current governments were willing to fix it by dumping the system. As a result all our electricity is priced according to the most expensive supplier, even when copious amounts of cheaper power make up most of the supply. It's nonsensical.

            1. munnoch Silver badge

              Re: How about

              And then we further distort matters with price caps and windfall taxes as if that will restore balance and fairness. Utter madness. The politicians need this explained to them with a house brick.

            2. Like a badger

              Re: How about

              "Strictly speaking the wholesale electricity price is set by the price demanded by the last marginal generator needed to meet demand, so much of the time that is gas

              That rule was brought in when the last marginal generator was wind, "

              Errm, no it wasn't. The whole system of marginal pricing is generally referred to as the Merit Order, and has existed since (IIRC) the late 1950s. It was used at that time to prioritise output from a menagerie of different coal fired power stations whose costs varied dramatically. It works just as well with gas plant, and in a strictly logical sense with renewables as renewables have the lowest marginal cost of generation. Unfortunately because renewables can't schedule output it means that the original logic of ranking plants in merit order and calling off as required no longer works.

              What we have now is a half baked hash up between econo-technocrat rules of the merit order, and a dysfunctional wholesale market where politicians and bureaucrats decide who can participate. This leads to higher energy prices and a far less effective transition away from fossil fuels, accompanied by none of the Stalinist central planning that's actually needed to implement the net zero grid beloved of the politicians.

              1. Anonymous Coward
                Anonymous Coward

                Re: How about

                The merit order model is a feature of any free market in a fungible product, it's much older than the 1950s.

                It's only applied to the UK electricity market since the 1990s, when that market was liberalised to encourage the development of renewable energy. Now that the gas price far exceeds that of any other major source the model isn't helpful. It creates artificially high profits for the cheapest sources, paid for by consumers who have no choice.

                1. munnoch Silver badge

                  Re: How about

                  I fail to see the merit in the merit order. Cheaper producers get over-rewarded whilst expensive producers still cover their costs and consumers are shafted because the average is always shifted towards the expensive end. Why can't we just have a simple weighted average?

                  The situation in the UK is exacerbated by the fact that even with renewables going balls out this still doesn't cover demand so there is always gas on the bars, So price is effectively pegged to gas.

                  If I was a huge generating conglomerate it wouldn't take too much to game the system by holding back a bit of wind (excuse me...) so that my elderly gas plant has to be brought online to bump up the settlement price.

                  Figures just published for 2024 point to the huge "success" that renewables generated ever so slightly more megawatt hours than gas. So basically we are half way there. But the second half of displacing gas will be enormously harder than the first.

                  Just fix the frigging broken market and then we can talk about de-carboning households.

                  1. Like a badger

                    Re: How about

                    @munnoch, if we park the problematic and expensive renewables, the merit order works well to minimise the costs of the system. In terms of a weighted average, that's exactly what customers on a non-time of use tariff do pay and is the main function of suppliers (as opposed to generators, system operators, transmission networks or distribution networks. The wholesale prices vary by half hour each and every day, all year round, if you've wisely signed up to a fixed price tariff with a well run supplier, you'll know what you're paying per unit for your entire contract. The system has worked (within the vast problems caused by inept government policy) to generate electricity at the lowest cost, and suppliers convert that to a retail product priced that consumers can understand. Businesses are not so lucky.

                    I suspect you're now thinking "why's this idiot saying the merit order minimises cost when the UK has the highest electricity prices in the civilised world?" and the answer to that is failed policies like privatisation that hasn't worked because government want to control the "market", failed regulation that allowed unstable suppliers to enter the retail market and unload billions of insolvency costs on consumers, government forcing suppliers to buy energy from more expensive renewable sources, government agreeing future generation prices through the criminally inept contracts for difference model, regulators allowing grid and distribution operators to load up bills through "network enhancements" to connect renewable generation built where there's no existing grid capacity, and of course, stupid policies like encouraging crappy solar power with subsidies which ultimately pushes consumers bills up, destabilises the grid, displaces despatchable generation, and takes farmland out of food production.

                    Regarding the much trumpeted "renewables overtake fossil fuels in 2024" claim, don't forget that a third of the "renewables" are biomass, and that's largely where Drax is being subsidised through government decided payments to burn the pelletised remains of the forests of Louisiana and Canada (including endangered old growth and primary forest). So slash and burn where UK consumers don't see, shredded with fossil fuel plant, freighted by diesel rail to a seaport, dirty bunker-fuelled shipping to Immingham, and then diesel trained to Drax. So renewable...yeah.

                    And then we have government plans to see off gas boilers for heating and use electric powered heat pumps, and to decarbonise both road and rail transport. So basically, that will roughly treble UK electricity demand (unless people give up transport, and sit at home shivering in the cold).

                    The problem is, government can't fix the market. It has already fundamentally broken it with a whole load of different interventions, often on very long term contracts of 25+ years which it can't now tear up. Hinkley Point C has an outlandish inflation-linked "strike price" that runs until about 2062, undersea interconnectors are probably similar. What government could do (but won't) is blame Trump, tear up some of the many daft commitments on climate change, and institute a new policy goal to have affordable energy at or below the IEA average cost that comes BEFORE all the net zero wank. That wouldn't be a panacea because of the existing misguided commitments, but it could at least stop further funding any stupid renewable or low carbon idea that comes along (CCS, large scale storage) and it needs to work out a competent and low cost nuclear strategy as a matter or urgency.

                    All of this could be done, but it won't be. Government don't get it, and the "it" is the concept that they're actively making the UK a place where it's too expensive to live, and too expensive to do business.

                    1. munnoch Silver badge

                      Re: How about

                      With that coherently presented argument its a wonder you haven't been down-voted into oblivion...

                      I've never quite grasped how CfD's interact with the market. I worked in finance, I know what a CfD is, I just don't get how it figures into the price I pay.

                      Combustion boilers already banned for new builds and renovations in Scotland. Welcome to the future!

                      1. munnoch Silver badge

                        Re: How about

                        So from the wikipedia page on Merit Order we get this:

                        "the set of generators with the lowest marginal costs must be used first, with the marginal cost of the final generator needed to meet load setting the system marginal cost"

                        Which I already knew was how it worked. but why should this be?

                        Say you want to buy 10 potatoes (a largely fungible product). Aldi can sell 8 at 10p each and Waitrose can sell the other 2 at 20p each.

                        If I tried to convince you that you should pay BOTH Aldi and Waitrose 20p per unit because that would minimise your total costs you'd quite rightly tell me to fuck off.

                        1. Like a badger

                          Re: How about

                          That's down to the auction design. The UK (like many "market" energy systems) uses a price-to-clear system, where all participants get the marginal price for the half hour, whereas a price-as-bid system means that generators get the price they bid at, irrespective of what the most expensive costs.

                          It has been suggested that the system operator should use a price-as-bid system, but in that case you'd have generators bidding higher prices of what are currently cheaper assets, because they already price-in lower with the current system knowing they'll get higher returns when lower merit generation is called. This debate only occurs because the system pretends to be a market and the system operator has to deal with commercial bids, whereas under the state monopoly the plant got called according to its actual marginal cost (excepting for specific circumstances).

                          In economic theory (admittedly a load of balls) the outcomes of price as bid and price to clear should be pretty much the same, there's an old presentation here, albeit pre-dating the current mess of so much generation coming from subsidised and "must-run" plant:

                          https://www.ofgem.gov.uk/sites/default/files/docs/2012/10/pay-as-bid-or-pay-as-clear-presentation.pdf

                          Basically, the wholesale market no longer functions as a market - half of the generation comes from suppliers who are not obliged to meet the old "must supply" test that despatchable generation meets, and they're taking no price or demand risk whatsoever. That's why the city bankers can't get enough of renewable investments, because banks can print up their own debt, and with virtually guaranteed demand it becomes a licence to print money at the expense of bill payers. And although government make all the decisions, they're claiming these billions are private sector capital and off the public sector balance sheet.

                          1. munnoch Silver badge

                            Re: How about

                            I suppose the difference versus my supermarket analogy is that if there are only 10 potatoes (or slightly more than 10) to go around then all or nearly all are going to get sold when consumers demand 10 regardless of price. Aldi then naturally will up their offer to just below Waitrose's because they only have to undercut by a baw' hair to guarantee selling all their stock.

                            If on the other hand there were 100 potatoes being offered in the market chasing buyers for 10 then suppliers would be motivated to be significantly more cut-throat.

                            As a farmer I could decide to grow turnips instead of potatoes with little/no extra investment (maybe a different attachment for my tractor) if I thought that was what the market was going to place a premium on. Fungible products and flexible production facilities makes it easy to pivot and go compete with someone. You need to be on your toes.

                            Not so electricity, the product may be highly fungible but the means of production is highly specialised. This makes it prohibitive to enter the market and coupled with the fact that your "competitor's" prices are predictable means its far from being a free market. Its actually a cartel.

                            1. Like a badger

                              Re: How about

                              Not really a cartel - the big players are acutely aware how much they'd be hit for if they did operate a cartel (and the regulators are on the lookout for this). And even at a few hundred million for a new CCGT the cost of entry isn't actually a big deal in a free market, if you look at the "dash for gas" after privatisation a lot of new entrants came in, and were able to find purely commercial funding. That couldn't happen now, because they'd struggle to get the regulatory approvals for a new CCGT, and even with those the prevalence of renewables mean that there's far less opportunity to run their shiney new CCGT. Competing in particular against wind means that the investors in that CCGT are having to take weather risks, and that pushes financing costs up hugely. So basically, the problem is not anti-competitive behaviours by participants, but is the absolute control exercised by government, whilst at the same time they try and maintain this pretence that there is such a thing as an energy market.

                              1. Jellied Eel Silver badge

                                Re: How about

                                Competing in particular against wind means that the investors in that CCGT are having to take weather risks, and that pushes financing costs up hugely.

                                The UK has never been good at weather risks, and is being 'assisted' by the 'renewables' lobby and the likes of their PR companies like the Bbc. Case in point, I flew back from falling gracefully(ish) down snow covered mountains. These, according to David Viner and other climate 'experts' should have been a thing of the past, and my partners kids wouldn't know what snow looked like. Which if true, they wouldn't have been happily outskiing me. But then the last few days, the Bbc has been heavily promoting Snowmaggedon instead of Thermageddon, because what was once known as 'Winter' in my youth has arrived. This certainly seems to have gotten the shower of.. what can only loosely be described as 'journalists' very excited. Yellow snow everywhere! Oh, no Nanook!

                                But energy demand is currently high, because it's, well, cold. Net Zero means we're going to decarbonise our heating, those policy costs are going to be loaded on to our electricity, demand and price are going to increase even faster.

                                So basically, the problem is not anti-competitive behaviours by participants, but is the absolute control exercised by government, whilst at the same time they try and maintain this pretence that there is such a thing as an energy market.

                                I think it's both. The lobby, which includes Schneider Electric and their advertorial make a lot of money from 'renewables' and 'sustainable energy'. Ironic given Scheider cut their (gear) team with steam, and the kind of company that today wouldn't have been competitive. If only they'd stuck with making sail-powered railway engines and wind powered iron foundries. But the 'renewables' lobby has successfully captured policy makers and regulators, so the market is what it is. Which is possibly a way out of the mess given 'renewables' has promised repeatedly that it's the cheapest form of generation evah, and it's only gotten cheaper since carbon fibre replaced sail canvas on windmill blades. Reality is of course entirely the opposite, hence the 'renewables' scumbags demanding (and getting) ever higher subsidies, which has lead to the UK's ever increasing energy prices, and decreasing economic competitiveness.

                                But thanks to 'renewables', the UK is now a world leader in energy poverty.

                                Why this is is made clear(ish) here-

                                https://dp.lowcarboncontracts.uk/dataset/actual-cfd-generation-and-avoided-ghg-emissions

                                So around £7bn a year in wind subsidies. On the plus side, all the GHG emissions the LCCC has helped 'avoid' might be why it's freezing now instead of being a nice, mild, energy efficient Winter. But then there are other forms of economic suicide. Ukraine decided to turn off gas transit through their country, reducing EU gas supplies and making UK electricity even more expensive. We don't buy Russian gas via Ukraine, but 'global gas prices' or something. The EU thinks this is great news (Net Zero achievement unlocked!) and is trying to say this is Russian energy warfare, even though the decision not to buy Russian energy is the EUs. And the EU is also threatening to fine/sanction Qatar a percentage of their global revenues (not just energy), if Qatar doesn't meet the EU's environmental standards. Last I looked, Qatar wasn't in the EU, and predictably responded by going 'OK! We won't sell you any more LNG".

                                Meanwhile, Trump is rubbing his hands in glee at the prospect of flogging US LNG.. Not that that can come anywhere close to meeting Europe's energy demands. Especially when they've also been supping deeply the Net Zero kool-aid, and their energy demand is also increasing to support their decarbonisation 'policy', along with trying to find electricity to inflate the AI bubble.

                                It really is very bizarre that this scam has been allowed to continue for so long, although perhaps unsuprising given the money being 'invested' by the 'renewables' lobby to keep morons like Millibrain blissfully ignorant. It'll take a brave politician to rip off the Green band-aid and consign the Age of Sail2.0 to the history books where it belongs, alongside the Tulip Bubble. About the only positive is SMRs are nearing readyness, but I think we can be certain those will face intense opposition from the usual suspects.

                2. Like a badger

                  Re: How about

                  "It's only applied to the UK electricity market since the 1990s"

                  Again, no, you couldn't be more wrong. There was not a public facing market prior to privatisation, but the CEGB applied the merit order to its own fleet from inception - and in fact the Electricity (Supply) Act of 1926 provided for the Electricity Commissioners (an ancestor body to the CEGB) to identify the most efficient power stations in each area, so fundamentally the merit order pre-dates the UK even having a national grid.

                  Since privatisation the merit order is now (ignoring the cludges for renewables) based on bid price rather than the marginal cost, but my point stands, the merit order in UK power generation can be traced back almost a hundred years. Sheesh, youth of today!

          2. MachDiamond Silver badge

            Re: How about

            "at times of peak demand it's oil fired generators or similar."

            That will depend a lot on where you are looking. In the US, the only oil-fired plants are at refineries so they can use bottom of the barrel sludge to generate the power to run the plant. I think California is down to one coal fired plant that serves a mining operation north of Los Angeles. In other parts of the US, they'll just pile more coal into the burners for more power. Out of the way places can run on diesel generators such as the Aleutian Island chain. Hawaii is slowly moving to more solar on an individual level due to grid costs.

            What depresses me is that even new power plants are dumping tremendous amounts of heat energy that could be put to use. I got to visit an orange orchard that had ground source heating from a nearby power plant to bolster the health of the trees and prevent frost from killing off a harvest. I keep thinking that any new power plants should be required to dedicate adjacent land to a complimentary business venture. I'm sure somebody would take advantage of that and the power company could get rent on that land in addition to selling heat.

            1. bombastic bob Silver badge
              Devil

              Re: How about

              that's sorta like co-generation. Putting power plants within reach of urban areas and selling the hot water (and making/selling chilled water with absorption chillers) works too.

              Efficiency is good.

    2. MachDiamond Silver badge

      Re: How about

      "When the boom goes bust there will be spare power generation and we can bin the unreliables."

      There isn't a world where "spare" generation is viable. Power plants are expensive to build (with gobs spent on planning and permits), have a long ROI and can't just sit idle without having a company or three declare bankruptcy. There will be a chucking out of the least financially efficient generation if demand drops. There will be no regard for environmental factors when that happens as "clean" power generation can have the worst financials sans government subsidies.

      1. codejunky Silver badge

        Re: How about

        @MachDiamond

        "There isn't a world where "spare" generation is viable"

        It would only be spare if the AI boom/data-centre boom crashes in which lots of energy generation assets will suddenly find less demand.

        "Power plants are expensive to build (with gobs spent on planning and permits), have a long ROI and can't just sit idle without having a company or three declare bankruptcy."

        Very true. This is again why wind and solar are such a bad idea when they need gas power sat just waiting to ramp up. But of course if the company declares bankruptcy the assets still sit there to be used productively or chopped up to have the valuable parts sold off. One thing we cultist west is short of is actual power generation so while a gamble on an AI/data-centre crash there would be actual power generation being built.

        "There will be a chucking out of the least financially efficient generation if demand drops"

        I am not sure about that. Governments have pushed the least financially efficient or even reliable generation for a couple of decades, that is hard to do worse. If companies also deploy unreliables then we dont care and they would probably go under, but those building (or partner in building) real energy generation would have power generators our politicians find politically difficult to build.

        1. MachDiamond Silver badge

          Re: How about

          "It would only be spare if the AI boom/data-centre boom crashes in which lots of energy generation assets will suddenly find less demand."

          The power would be "spare" only for a short period of time. Right up until the operator has to declare bankruptcy when they can't make their loan payments and the bank runs out of patience.

  6. ComicalEngineer

    What does AI (of whatever flavour) have to say about these predictions?

    Or did it write the report in the first place?

  7. MachDiamond Silver badge

    Where's the application?

    Shiploads of money are being invested into AI and datacenters with hopes that there will be a killer app that emerges sometime in the future that will pay those investments back. I've seen loads of party tricks thus far, but I'm not seeing uses that justify the energy being put into all of the projects. Is it FOMO? Are investors looking to make a killing and willing to take big risks? I invest using the tortoise method. I can't take on as much risk so I have to be more conservative and I'm not seeing any positions with an AI component that fits the bill. My thought is that these companies need to "niche down" and not try to build general purpose applications.

  8. steviebuk Silver badge

    Hopefully

    This is the start of the bubble burst.

  9. Evaluator

    Electricity as Crack

    Its important to watch out for electricity addiction resulting from chatbot addiction. Just cap it at todays levels, make the software and hardware boffins figure out how to do it on a budget.

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