Renewable Gas Peaking Plants

Natural Gas Peaking Power Plant

In the first entry of the RenewaBlox blog; The UK Energy System, we took a whistle-stop tour through wind farm curtailment, transmission boundaries, DERs and the UK’s primary ancillary market, the Balancing Mechanism.

Here, we’re going to hone in on one type of generating asset in particular called Peaking Power Plants, and set-up one of RenewaBlox’s most exciting business models:

A Bitcoin mining-enabled renewable peaking plant.

Peaking Power Plants

What are they?

Gas peaking power plants, or "peakers", are generators which are utilised to help balance the electricity grid. Unlike ‘baseload’ plants such as nuclear or coal, gas peakers have the ability to fire up when there is a sudden high demand for electricity, or an abrupt fall in supply.

There are over 200 of these gas peakers across the UK, many of which are operating less than 10% of the year.

We encountered them back in The UK Energy System, Part 1; the back-up gas plant that supplied emergency power to the Leeds hospital. Peaking plants such as this make up the brunt of the £1.085B of turn-up constraint costs incurred in 2025.

Inefficient, Expensive and Polluting

Gas peaking plants have a rather unfortunate trifecta, and as a result, are among the worst performing generation assets in the Country. Coming in at a generation cost of 17.5p per kWh and emissions of 480gCO2 per kWh, these plants are 150% more expensive & 37% more polluting than conventional gas plants, which are themselves the biggest driver of electricity costs.

Peaking plants provide dispatchable power in demand peaks, but are among the worst perfoming assets on the UK grid.

The higher costs and emissions are a consequence of the inherent inefficiency of delivering emergency power:

• Cold start penalty - Gas generators operate at peak efficiency when running at a steady baseload. The continuous cycle of peakers ramping up to full load, shutting down, and repeating hours or days later burns more fuel, releasing further emissions

• Methane slip - Compounding the plant inefficiency is the incomplete combustion of methane (natural gas). Rapidly firing up and shutting down leads to methane escaping unburned.Thanks to the brilliant contributions of Daniel Batten, Bitcoiners are acutely aware of the significant impact that methane has as a greenhouse gas, which is 80x more potent than CO2 over a 20-year time frame

• Unproductive Capital - Peaker plants sit idle for 80 to 90% of the year with fixed overheads and staff on standby, ready to fire up if needed. This drives up the marginal costs of electricity from these plants, which must generate annual revenues from very few hours, amplifying those peak electricity costs

Surely there’s a better way?

The RenewaBlox Renewable Peaker Plant model moves away from the traditional method of delivering emergency power via dirty, standby generation by shifting the flexibility onto demand.

But first we must explore the integral component of this model; renewable gas provided by anaerobic digestion.

Anaerobic Digestion

What is it?

An anaerobic digester (AD) is essentially a giant, industrial stomach which breaks down organic material without the presence of oxygen. You might have seen these green domes (pictured below) when driving through the countryside.

Anaerobic digestors can be found all over the UK's countryside

These domes are sealed tanks which are heated and kept oxygen free (an-aerobic), enabling an accelerated decomposition of the organic matter to produce methane. This is a continuous process, providing a steady stream of methane which is fed into a combined heat & power (CHP) engine to generate baseload electricity.

Sustainable, circular and cost-competitive

Unlike gas peaker plants, anaerobic digestion is a highly productive process which contributes to the circularity of farming, and produces a number of different outputs:

How anaerobic digestion takes waste and generates fuel

The fuel for this process is renewable, provided by sustainable sources such as food and agricultural waste, and as a result, is a net-carbon neutral fuel as all of the carbon emitted when burning the methane was originally captured from the air.

In fact, there is a strong argument that the process is net-carbon negative when preventing organic matter ending up at landfill. Much of the organic waste at landfill ultimately goes through the same anaerobic breakdown, only this time, methane is vented unchecked into the atmosphere.

Finally, the byproduct of the process, digestate, can be used back on the farm as a fertiliser.

RenewaBlox Renewable Peakers

Unlocking flexible supply

RenewaBlox Renewable Peakers sit at the intersection of both technology types:

Gas peaking plants are the worst-performing and most polluting power plants in the Country, but they are a necessity for providing emergency supply when required by the grid. This need is becoming more pertinent as the UK adds further intermittent renewables and NESO continues its ambitious plan for renewables to dominate the UK grid by 2030.

However, on its own, Anaerobic digestion is a baseload supply and cannot provide the dispatchable, on-demand power that the grid needs. To unlock this functionality, RenewaBlox will co-locate Bitcoin mining data centres with AD plants as the primary customer of energy, and thus remove this as a baseload supply from the grid.

Then, by leveraging the flexibility of Bitcoin mining, RenewaBlox will participate in the wholesale electricity market and the balancing mechanism by ramping down the Bitcoin mining demand, enabling the generation to meet demand when it is needed most.

The Secret Sauce

RenewaBlox data centres can unlock new revenue streams for AD asset owners by enabling participation in the UK's lucrative ancillary electricity markets.

The secret sauce which facilitates this is the real-time dynamic hashprice:wholesale price arbitrage. As renewable penetration continues to increase, wholesale electricity price spreads are widening. This means that the delta between the cheapest and the most expensive electricity is increasing - during times of renewables scarcity and high demand, wholesale prices alone can spike to over 50p / kWh, and on some occasions, have climbed as high as 100p / KWh.

Conversely, occurrences of renewable abundance lead to low and even negatively priced electricity, and by 2027, electricity is projected to be negatively priced over 10% of the time.

Hashprice vs Wholesale Electricity Cost allows for demand driven export of electricity to the grid

For AD asset operators selling to the grid as a baseload plant, those fixed PPA contracts must weather this volatility, constraining the revenue potential for these sites.

RenewaBlox data centres enable the asset to extract the maximum value for its power at every market settlement period, either mining Bitcoin, or exporting to the grid.

Utilising Bitcoin mining as an arbitrage tool for AD plants also provides a hedge against electricity prices. At the time of writing, the war in Iran has entered its 4th week and wholesale prices have increased substantially off the back of a doubling in the gas price. The Peaker trading strategy would naturally weight towards export in this environment, but with a still-anticipated glut of liquified natural gas (LNG) due to enter the market, ramping up over the next few years, a Bitcoin mining hedge is the ideal strategy for AD operators to future proof their assets.

RenewaBlox will be deploying our first project into this innovative & exciting business model later this year.

Contact Us

If you or anyone you know works in the Biogas sector, please don’t hesitate to reach out to me on Callum@renewablox.com.