Transition Prog - FAQ's

Island Plan - Onshore Renewables Update 18 Jul 2023

When most people think of the cost of electricity, they probably imagine the price of electricity is governed only by the cost of generation i.e. the cost of fuel in the case of gas or diesel, or the cost of transforming a renewable resource such as wind or solar into electricity. In reality, the total cost of electricity is much more complicated than simply purchasing raw materials.

Here are some of the hidden costs that are baked into our electricity bills regardless of how electricity is generated:

• Infrastructure: Electricity needs to be transmitted and distributed from generation facilities to homes and businesses, requiring a network of power lines, substations, transformers, and other equipment. The cost of building and maintaining this infrastructure is also included in our electricity bills. This makes up a portion of our electricity bills on top of generating costs.
• Stability: Manx Utilities has an obligation to ensure the electricity on our network and in our homes is maintained within strict limits to ensure we do not lose power to certain areas of the network and to ensure the safety of our customers. Maintaining the system limits has a cost which may include running other generating equipment in tandem. This makes up a portion of our electricity bill on top of generating costs.
• Resilience: The Isle of Man has one of the most resilient power systems in Europe and has not experienced a full-system black-out in over 20 years. Predominantly this is because of the many layers of back-up, which can always be guaranteed regardless of the prevailing weather conditions. This back-up is known as ‘firm-capacity’. Even if we generated 100% of our power from wind and solar it would still be required. This back-up plant has to be paid for even if it is not utilised to make sure that we can always meet Island demand even if the sun doesn’t shine, or the wind isn’t blowing. Even if you have your own solar panels on your roof and you are connected to our system, you will need to contribute to this cost. This makes up a portion of our electricity bill on top of generating costs.
• Balancing and Settlement: The Isle of Man is connected to the power system in Great Britain (GB) via a distribution interconnector. The GB electricity market has a set of rules which we must comply with in order to sell and buy power from GB. Each half hour Manx Utilities must declare how much power it will either be importing (to meet Island demand) or exporting (to provide the service we have been paid for) through the interconnector. If we are ‘short’ then we can receive a fine from Ofgem and if we are ‘long’ then we are not paid for any of the extra power. These additional costs are known as balancing and settlement costs. This makes up a portion of our electricity bill on top of generating costs. If power can be controlled to an exact output then there is much lower risk of these costs being imposed.
• Finance: Building new power plants or upgrading existing facilities requires significant upfront investment, which is often financed through bonds or other debt instruments. The interest on these investments is ultimately paid for by customers, and contributes to the cost of electricity.

The cost of generating electricity a unit of electricity from wind or solar can be lower than the cost of generating from fossil fuels such as gas at the point of generation. However, the total system costs for all intermittent renewable power is expected to be higher because balancing the system is more challenging when predicting output is dependent on the weather forecast.

Current projections indicate that the project will not have a significant impact on the cost of electricity.

Manx Utilities has not ruled out tidal power for beyond 2030 but in the short-term the cost of the technology is still too high for this to be a commercially realistic proposal at this point in time. Tidal technologies are expected to come down in cost over the next few decades and Manx Utilities continues to monitor developments in this technology. 

There have been no active volcanoes within the British Isles for the last 60 million years and the cost of drilling to deep strata means this is a very expensive option for the Isle of Man. Despite having the best geothermal potential in the British Isles, the geothermal development in Cornwall has still failed to generate the superheated steam required to produce electricity and is not yet even technically viable. There is a long-way to go before deep-well geothermal becomes a commercially viable solution for the Isle of Man. 

Manx Utilities will continue to engage with private developers who wish to build ‘grid scale’ renewable projects and will be happy to work with them to better understand their needs.  The commercial risk of a project should not be passed onto our customers and nor should the quality of supply be compromised therefore we encourage developers who wish to provide electricity to our grid system to explain their plans to us

The surveys include but are not limited to:

• Topographical and LIDAR surveys
• Geotechnical surveys
• Analysis of the relevant network limitations
• Meteorological monitoring and surveys
• Energy yield and performance analysis
• Feasibility studies
• Transport surveys
• Consultations
• Technology assessments including number of turbines and size of turbines
• Super-load shipment route surveys (including review of site access arrangements)
• Environmental surveys including:
  • Bat and bird surveys
  • Flood risk, drainage and hydrology assessment
  • LCA Carbon and climate audit
  • Noise and vibration assessment
  • Visual Impact assessment
  • Ecological surveys and impact assessments
  • Environmental Impact Assessment
  • Landscape change assessment
  • Cultural heritage and archaeological studies
  • Air traffic considerations
  • Socio-economic impact assessments (including appropriate consideration of the Just Transition principle)
  • Collision Risk Assessment
  • Air Quality Assessment
  • Waste and decommissioning assessment

Our World in Data has provided a series of safety statistics for all generation technologies to show how low carbon technologies compare to fossil fuel technologies. This data set includes incidents both from those operating the technologies, as well as incidents caused by the pollutants which arise from the operation of the industries globally. The safest and cleanest technologies are renewable or carbon neutral fuels.

The following infographics may be useful to those interested in safety metrics:

Source: Our World in Data