Electricity price hike

[joe90]

I now might re consider installing solar panels as a DIY instal is cheaper than it used to be. ?

[SteamyTea]

1 hour ago, billt said:

 

Well, if the grid was supplied by zero carbon energy you might have a point, but as most of it comes from pollution emitting sources, that's not a good argument.

Except the grid is getting cleaner all the time.

Often below 100g/kWh these days. The last year we have full numbers for is 2019 and overall carbon dioxide emissions were 210g/kWh.

Gas boilers are around 200g/kWh.

Gas boilers are not going to get any more efficient, and most don't get close to the laboratory maximum.

So I shall stand by my statement that electricity is the way forward and will be a major contributor to reducing emissions.

We are not electrifying for no scientific reasons at all.

[AliG]

3 hours ago, billt said:

Well, if the grid was supplied by zero carbon energy you might have a point, but as most of it comes from pollution emitting sources, that's not a good argument.

For the past year the grid has been roughly 23% renewable and 17% nuclear, 42% fossil fuels. It is also 7% biomass, but I would argue against its credentials as being low carbon.

 

The other 10ish percent comes from interconnections which are mainly low carbon from French nuclear, with Norwegian hydro being added.

 

The renewable percentage will continue to increase and I would expect it to be around 50% in 7 or 8 years, by which point we will be at around 70-80% zero carbon.

 

https://grid.iamkate.com

 

 

 

 

[SteamyTea]

[AliG]

Had a bit more time to look at the futures markets.

 

Last summer prices were around 40p/therm. A therm is 29.3kWh.

 

Thus the wholesale price of gas was around 1.3p/kWh. My fix was at 2.1p. So basically 0.8p above the cost of the gas to account for transmission costs, overheads, hedging costs and profits. 

 

Thus we can probably use a rough rule of thumb that the price to a consumer is going to be around the wholesale price of gas plus 1p/kWh.

 

The spot price hit 241p on Friday. The November-February and Q1 22 futures prices are all around the same.

 

Thus if you had not hedged your prices by buying in the futures market last year, your wholesale cost of gas in the next five months would be 8.2p/kWh and you could have to price gas at around 9p/kWh to breakeven. This compares to the current cap of around 4p!

 

The summer and winter 22 prices are around 120p. So you would need to sell gas at around 5p/kWh. Just a week ago these prices were around 25% lower so you were looking at 4p.

 

If I took out a fix today it would be at about 5.5p to the end of next year which aligns with this.

 

The 23 price is around 80p and the 24 price around 60p. Equivalent to 3.7 and 3p per kWh to consumers. All these prices have increased by around 1/3 in the last week.

 

24 months fixes also seem to be priced at around 5.5p/kWh. This is not a good deal looking at the 2023 future. You could lock in a price of less than 4p for 2023 in the futures market.

 

As i say futures markets do not act as you might expect. Theoretically they should be the price that you expect something to be at some point in the future. In reality the biggest driver is what is happening today and futures markets go up and down based on this albeit with less volatility than the spot market.

 

If you wanted you could of course hedge your own gas price using the futures markets! Not something I would recommend and this is a highly simplified example and there would be all kinds of things to take into consideration such as financing costs and matching the contracts to your actual usage.

 

For example you could buy 75000 kWh of 2024 gas at the current 60p/therm price. This would cost roughly £1500 today. If gas prices do not fall and are still 240p/therm in 2024 then you would make a profit of £4500 and this would offset the increase in you gas bill. On the other hand if gas prices went back to 40/therm then you would lose £500 on the futures but gain from a lower bill. Basically you could locking a price of about 3p/kWh today (Note you could have locked in closer to 2p a week ago)

 

 

 

 

[SteamyTea]

8 minutes ago, AliG said:

If you wanted you could of course hedge your own gas price using the futures markets! Not something I would recommend and this is a highly simplified example and there would be all kinds of things to take into consideration such as financing costs and matching the contracts to your actual usage.

 

For example you could buy 75000 kWh of 2024 gas at the current 60p/therm price. This would cost roughly £1500 today. If gas prices do not fall and are still 240p/therm in 2024 then you would make a profit of £4500 and this would offset the increase in you gas bill. On the other hand if gas prices went back to 40/therm then you would lose £500 on the futures but gain from a lower bill. Basically you could locking a price of about 3p/kWh today (Note you could have locked in closer to 2p a week ago)

That is brilliant, I have eventually understood, a bit, how this hedging works.

So it is either sell it, or use it, depending on the price paid and the current price.

[AliG]

15 minutes ago, SteamyTea said:

So it is either sell it, or use it, depending on the price paid and the current price.

Yes these contracts are for physical delivery.

 

You can either take delivery of the gas or you can sell the contract before it expires.

 

Usually people buy futures on "margin" which means that they do not have to put up the whole cost up front but they have to put up margin as the price changes. This makes sense in this market as you pay for gas in arrears so the gas company does not have cash that they can use to buy gas you have not yet used.

 

As prices move around and get more volatile margin costs can get very expensive, another cost that has to be factored into the cost of gas.

 

https://www.theice.com/products/910/UK-Natural-Gas-Futures

 

I don't recommend turning up at the National Balancing Point to collect your gas!

 

One more thing.

 

Normally the futures market is higher than the spot market. Thus to lock in a cost in the future you pay more for a commodity in exchange for certainty of price. The UK market relies more on spot commodities as it is normally cheaper, but carries the risk of getting into the situation we are in now.

 

When the futures prices in below the spot price this is considered unusual and called backwardation.

 

https://www.investopedia.com/articles/07/contango_backwardation.asp

[epsilonGreedy]

20 minutes ago, AliG said:

Yes these contracts are for physical delivery.

 

You can either take delivery of the gas or you can sell the contract before it expires.

 

 

I see a danger here, last year the price of crude oil in the US went negative because there was no demand for futures as they expired and became deliverable. Owners of these contracts had to pay others to store the unsaleable commodity.

 

In an extreme case the forum could design @SteamyTeaa barrage balloon so he could take delivery of his excess methane.

[epsilonGreedy]

22 hours ago, billt said:

Always thinking about it, but electricity is still 5x the price of gas. Where's the heat pump with a seasonal COP of more than 4 for a non passivhaus?

 

 

I am glad someone else posted this. Recent electricity price gyrations seem to have tilted the decision back in favour of mains gas for the moment.

[joe90]

Don’t worry, the answer is here, free electricity https://easydiypowerplan.com/?pid=1&hop=canhdong90

 

how do people sleep at night selling snake oil?, I was intrigued to see what the actual plans show you (which must be bollocks) ?

[newhome]

3 hours ago, epsilonGreedy said:

 

I am glad someone else posted this. Recent electricity price gyrations seem to have tilted the decision back in favour of mains gas for the moment.

I’ve been on a heat pump group as I was vaguely reconsidering whether to swap my electric boiler for a heat pump. The cost to install is still too expensive and I’ve seen post after post from people seeking advice when their heat pump doesn’t perform to the standards needed to heat the house or the bills are astronomical. These are systems fitted by supposedly MCS certified engineers. So I don’t think the costs stack up at all yet, and nor is the expertise in place to make it a mainstream choice just yet. As I can’t have gas here I will trundle on with the electric boiler which needs next to no maintenance and once I can eventually move to a time of use tariff I will do so as heating, DHW and car charging are my big hitters and can easily be run in a 3 hour window. 

[DragsterDriver]

4 hours ago, epsilonGreedy said:

 

I am glad someone else posted this. Recent electricity price gyrations seem to have tilted the decision back in favour of mains gas for the moment.

I actually have a new oil boiler in storage and a tank, I’m wondering how insane it would be to have air source and solar on my new build but also utilise the oil set up I have in storage?

[joth]

24 minutes ago, DragsterDriver said:

I actually have a new oil boiler in storage and a tank, I’m wondering how insane it would be to have air source and solar on my new build but also utilise the oil set up I have in storage?

As we descend into this Mad Max future I don't think backup options that insane at all.

In fact, as we electrify our primary sources maybe there's a market for multifuel backup generators. Like my Primus omnifuel camping stove that'll chug down anything from petrol, diesel, aviation fuel, to paraffin or butane

 

Edited October 2, 2021 by joth

[Ferdinand]

4 hours ago, newhome said:

I’ve been on a heat pump group as I was vaguely reconsidering whether to swap my electric boiler for a heat pump. The cost to install is still too expensive and I’ve seen post after post from people seeking advice when their heat pump doesn’t perform to the standards needed to heat the house or the bills are astronomical. These are systems fitted by supposedly MCS certified engineers. So I don’t think the costs stack up at all yet, and nor is the expertise in place to make it a mainstream choice just yet. As I can’t have gas here I will trundle on with the electric boiler which needs next to no maintenance and once I can eventually move to a time of use tariff I will do so as heating, DHW and car charging are my big hitters and can easily be run in a 3 hour window. 

 

Is the general issue that they followed grants rather than Fabric First?

[billt]

14 hours ago, newhome said:

I’ve been on a heat pump group as I was vaguely reconsidering whether to swap my electric boiler for a heat pump. The cost to install is still too expensive and I’ve seen post after post from people seeking advice when their heat pump doesn’t perform to the standards needed to heat the house or the bills are astronomical. These are systems fitted by supposedly MCS certified engineers. So I don’t think the costs stack up at all yet, and nor is the expertise in place to make it a mainstream choice just yet. As I can’t have gas here I will trundle on with the electric boiler which needs next to no maintenance and once I can eventually move to a time of use tariff I will do so as heating, DHW and car charging are my big hitters and can easily be run in a 3 hour window. 

 

Despite being a sceptic against the "heat pumps will solve all our problems" theme, yours is actually a case where I would install an ASHP.

But I would design and install it myself, so I'd have a high level of confidence in it working as intended and not being too expensive. It's a problem when you have to rely on costly 'experts' of unknown ability.

[DragsterDriver]

1 hour ago, billt said:

 

Despite being a sceptic against the "heat pumps will solve all our problems" theme, yours is actually a case where I would install an ASHP.

But I would design and install it myself, so I'd have a high level of confidence in it working as intended and not being too expensive. It's a problem when you have to rely on costly 'experts' of unknown ability.

this was my issue on the solar thread. I want my entire set up to be the best possible and work together, but the ‘design’ comes from the salesman and that seems dicey? 

[SteamyTea]

1 minute ago, DragsterDriver said:

this was my issue on the solar thread. I want my entire set up to be the best possible and work together, but the ‘design’ comes from the salesman and that seems dicey? 

We have discussed to death the merits and drawbacks of different heating systems.

The one thing that keeps cropping up is the lack of justified, and verifiable, design.

Trouble is, no one is willing to pay for it, so what do people expect.

[joe90]

1 hour ago, billt said:

 

Despite being a sceptic against the "heat pumps will solve all our problems" theme, yours is actually a case where I would install an ASHP.

But I would design and install it myself, so I'd have a high level of confidence in it working as intended and not being too expensive. It's a problem when you have to rely on costly 'experts' of unknown ability.

Yes heat pumps won’t solve all our problems or replace gas boilers in badly insulated houses. I self installed mine which I bought cheap on Ebay and am very pleased with it.

[SteamyTea]

1 minute ago, joe90 said:

heat pumps won’t solve all our problems or replace gas boilers in badly insulated houses

What particular problems and why not in badly insulated houses?

 

Take two houses that have the same heat load i.e 30 kW @ -5⁰C.

 Will a correctly sized ASHP under perform just because it is an ASHP, compared to a gas boiler?

Does it even know it is an ASHP?

Does a gas boiler know it will perform better because people on internet forums say it will?

 

Design it right.

[MikeSharp01]

6 minutes ago, SteamyTea said:

The one thing that keeps cropping up is the lack of justified, and verifiable, design.

But why does this need paying for surely its pretty simple, perhaps we could work out a straightforward process that would lead to a verifiable design and close the loop.

[MikeSharp01]

2 minutes ago, SteamyTea said:

Does it even know it is an ASHP?

Nope its just an energy converter like the gas boiler!

 

[MikeSharp01]

3 minutes ago, SteamyTea said:

Take two houses that have the same heat load i.e 30 kW @ -5⁰C.

As you say if common load then it drops out of the equation the problem is that heating load of the building is only one dimension of the requirements, the other is, often, Domestic Hot Water (DHW) and this is where the two heat converters seem, to many, to have different capabilities - IE the combi principle

[SteamyTea]

4 minutes ago, MikeSharp01 said:

But why does this need paying for surely its pretty simple, perhaps we could work out a straightforward process that would lead to a verifiable design and close the loop.

It is mainly the over complicated and expensive BSI/Eurocodes system employed. 

 

[MikeSharp01]

1 minute ago, SteamyTea said:

It is mainly the over complicated and expensive BSI/Eurocodes system employed. 

If the process encapsulated this then why is it a problem. Perhaps an AI could do it?

[SteamyTea]

5 minutes ago, MikeSharp01 said:

Nope its just an energy converter like the gas boiler!

 

There are science philosophers that may disagree, but I don't agree with them. 

32 years after his death, Paul Feyerabend's ghost is still haunting us.