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Energy crisis

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  1. SRD
    Moderator

    Seen on twitter (thread here - starts as a response to another tweet https://twitter.com/gordon_dhg/status/1563539534276485120?s=12 )

    (My text below missing the diagrams)

    “We last got 50% of our gas from the UK North Sea 13 years ago, back in 2009

    We now only get 30% of our gas from the UK North Sea - & falling

    We buy 70% of our gas from overseas

    It's now very expensive

    So making electricity from that gas is now very expensive

    But - and this makes no sense - we automatically raise the price of nuclear & renewable power to match the sky-high price of electricity made from this much-more-expensive gas

    We can stop doing that - very easily

    We simply extend the existing “Contracts for Difference” system, and add a price cap to all low-carbon electricity

    The pale purple slice has price caps

    Add price caps to the red slice too

    That will cut £1,200 from our bills, come April

    If Scotland and the rest of GB did this, the price rise would be much smaller

    If Scotland was Independent and did this on its own, the electricity prices would have fallen in Scotland by almost 10% over the past year

    While prices rose by over 80% in the rest of the UK

    Posted 2 years ago #

  2. SRD
    Moderator

    pre-fab letter to tweak & send to your MP
    bit .ly/cc-mpcutmybills

    A quick explanation in 5 posts
    bit .ly/cc-explanationthread

    A slideshow, including the link to the letter
    bit .ly/CC-CutElectricityPrices

    Posted 2 years ago #

  3. steveo
    Member

    This has been bothering me all year. We regularly generate more than 60% of our electricity from non gas, South Scotland on a moderately windy day is almost entirely wind powered, it's difficult to turn nuclear down so its pretty constant regardless.

    I can only assume that the contracts for wind farms etc are pegged to gas prices and buying out of those contracts would expensive and send the exactly the wrong message to companies investing in renwavlss.

    Posted 2 years ago #

  4. Baldcyclist
    Member

    Aren't the units of energy just traded on the international wholesale market, so it doesn't matter what the generation cost or location or type (renewable or not) is - ie why Shell/BP are raking it in, and presumably renewable companies are too.

    Thought I read EU are looking to try and decouple from international energy markets.

    Posted 2 years ago #

  5. Baldcyclist
    Member

    European / UK Govts will soon start reversing their decisions to stop Quantative easing, and will soon start pouring £Bns QE money into peoples pockets again to get them through the winter.

    Posted 2 years ago #

  6. SRD
    Moderator

    nope. I asked the guy who wrote the twitter thread. I had assumed the prices were set to not penalise those who use gas. he says it's the opposite. "current policy makes sure that electricity doesn't get any cheaper, relative to gas, so penalises people who use electricity.

    he notes that the system used to work quite well for 'us' (presumably scotland?)

    but gas prices have soared by a factor of 10 and that's put the whole system out of whack. "

    worth clicking through the tweet thread and looking at the graphs.

    Posted 2 years ago #

  7. jonty
    Member

    I can understand that pinning renewables to the gas price exactly might be a slight distortion but, like Baldcyclist says, why (given profit motives and an absence of relevant regulation) would you sell energy at less than the prevailing rate no matter where it came from?

    If you're selling gold you don't get asked whether you found it in the back of a cupboard or spend thousands mining it by hand, you just get roughly whatever the market rate of gold is at that time.

    However, I've heard a lot about this being an issue so there must be something else going on. I guess the energy market is a bit of a financial fiction as clearly you'll still get the same electrons from the grid no matter what, so I guess altering the terms of how the fiction relates to reality in a way that the market won't immediately 'correct' for.

    Posted 2 years ago #

  8. neddie
    Member

    I suspect the electricity price in the price-cap is artificially high and the gas price in the cap artificially low.

    Wholesale gas prices have increased 9x, yet the gas-price-cap has only increased (will increase) 5x. So maybe that difference is being "made up" for the suppliers by high electricity prices and high-electricity-cap.

    40% of UK electricity is now renewables. Ignoring nuclear whose costs are largely fixed, that means gas is used for around 50% of generation. So the increase in wholesale gas prices should really only account for a smaller increase in electricity prices

    Any why have they increased the standing charges so massively? The infrastructure and admin costs haven't changed significantly.

    Posted 2 years ago #

  9. jonty
    Member

    My understanding is that the standing costs are largely to pay for costs incurred during the collapse of operators last winter.

    Looking at this retrospectively the collapsed companies were essentially funnelling money from 2022 energy customers pockets into their pre-2022 shareholders' (and arguably customers') pockets.

    This is also a model essentially used by smaller low-cost airlines too, which collapse at the drop of a hat as soon as market conditions cease to be optimal, although there the pain falls largely on creditors and ticketholders. (Although the latter often then claim this back from their credit/debit card provider which then socialises the cost, probably in a quite inequitable manner. )

    Posted 2 years ago #

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