Where is the kWh price heading in 2022?

[epsilonGreedy]

I think this is a building related subject because a medium term perspective on energy price rises in the pipeline will help self builders rank the importance of insulation in their new builds.

 

There is media talk about Ofgem authorizing another in substantial price rise in the kWk price cap at Easter. Are there any informed guesses what that new price cap will be?

 

I reckon we will see a further 15% to 20% rise.

 

According to the price break down charts published by Ofgem the wholesale cost of electricity accounts for about 40% of the unit price. Gas powered generation provides 40% of our electrical power though this will surely have to tick up noticeably in 2022 when scheduled nuclear plant closures reduce our nuclear capacity by 20% or 3% of total annual demand. Current high gas prices look set to be sustained throughout 2022.

 

Ofgem unit price breakdown: https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-programmes/default-tariff-cap

Generation by fuel type: https://grid.iamkate.com/

https://www.itv.com/news/westcountry/2021-04-13/hinkley-point-b-staff-still-have-futures-in-industry-after-it-stops-operating-in-2022

 

[nod]

We are dammed if we do and dammed if we don’t 

Electricity price rises will keep pace with gas rises Or visa versa 

If we could all convert to solar power 

There would be a tax on the sun 

 

[Radian]

27 minutes ago, epsilonGreedy said:

Gas powered generation provides 40% of our electrical power though this will surely have to tick up noticeably in 2022 when scheduled nuclear plant closures reduce our nuclear capacity by 20% or 3% of total annual demand. Current high gas prices look set to be sustained throughout 2022.

 

Massively high despite plenty of new sources coming online and no significant cost increases in extraction from existing sources.

Time for a windfall tax on OGUK members who are profiting from the issues leading to high prices in continental Europe?

[epsilonGreedy]

11 minutes ago, Radian said:

Massively high despite plenty of new sources coming online 

 

 

This needs to be viewed against the historic decline the UK's north sea gas production. Your article does not mention actual numbers.

 

13 minutes ago, Radian said:

 

Massively high despite plenty of new sources coming online and no significant cost increases in extraction from existing sources.

Time for a windfall tax on OGUK members who are profiting from the issues leading to high prices in continental Europe?

 

The underlying issue is the global rise in demand for gas, this will get worse with many nations, notably Germany, retiring nuclear and coal generation capacity. Over in the US a change in political leadership will hurt gas production.

 

There is no good news, I think we could hit £0.30 per kWh in 2023 before rising wind power capacity effects a long term correction. 

[SteamyTea]

Most people could easily cut usage by 30%.

Long term historic prices have been 5% of median household income.

[epsilonGreedy]

4 minutes ago, SteamyTea said:

Most people could easily cut usage by 30%.

 

 

If you were advising the typical British family how to cut electricity consumption by 30% in 2022 what would you recommend? 

Edited December 30, 2021 by epsilonGreedy

[ProDave]

17 minutes ago, SteamyTea said:

Most people could easily cut usage by 30%.

Clearly we are not "most people" then because I keep trying and failing to find anywhere we "waste" energy.  The only savings I can see is cook less, wash us or our clothes less. watch less television, don't keep food in a fridge or freezer, sit in the dark at night or sit in a cold house.

[epsilonGreedy]

8 minutes ago, ProDave said:

Clearly we are not "most people" then because I keep trying and failing to find anywhere we "waste" energy.  The only savings I can see is cook less, wash us or our clothes less. watch less television, don't keep food in a fridge or freezer, sit in the dark at night or sit in a cold house.

 

Cheer up, your super insulated new build will turn you into a Thermal Aristocrat while the other 90% of Britons descend into thermal poverty.

 

Next winter you will be able stand behind your triple glazed windows and shout at the thermal peasants "let them eat cake and wash once a week".

Edited December 30, 2021 by epsilonGreedy

[Thedreamer]

In properties insulated to a good standard is there any scope to heat a house to higher temperature during off peak times and let the temperature slowly drop before re-heating again. Is this an efficient strategy with an air source heat pump and UFH. Can people live in variance of say 23c to 18c?

 

I adopt this approach with my stove, which is my cheap heat input and my electric heating bill this winter is a few pence. This rare electric heating boost from a cheap oil electric radiator was only needed due to 1c temperature over a few overcast days.

 

I know people on here have better insulation, airtightness and ventilation than me, therefore would expect this to be achievable.

[ProDave]

1 minute ago, Thedreamer said:

In properties insulated to a good standard is there any scope to heat a house to higher temperature during off peak times and let the temperature slowly drop before re-heating again. Is this an efficient strategy with an air source heat pump and UFH. Can people live in variance of say 23c to 18c?

 

I adopt this approach with my stove, which is my cheap heat input and my electric heating bill this winter is a few pence. This rare electric heating boost from a cheap oil electric radiator was only needed due to 1c temperature over a few overcast days.

 

I know people on here have better insulation, airtightness and ventilation than me, therefore would expect this to be achievable.

Yes I could do that with this house.  But the counter argument would be I would be running the ASHP when the air temperature is at it's lowest so the COP may be worse and it may need to defrost more often than running in the daytime.

 

A few months ago I was considering switching to Octopus Go to get the very cheap, but short, night time rate and do most of the DHW heating at that time.  I hesitated due to my dislike of having to get a smart meter.  but at the time it would have given me a very slightly cheaper day rate as well as the cheap night rate.  Alas, now with the turmoil in the energy markets, if I switched now, the day rate would now be higher than my 24/7 tariff.

[ProDave]

17 minutes ago, epsilonGreedy said:

 

Cheer up, your super insulated new build will turn you into a Thermal Aristocrat while the other 90% of Britons descend into thermal poverty.

 

Next winter you will be able stand behind your triple glazed windows and shout at the thermal peasants "let them eat cake and wash once a week".

As I have mentioned before, my heating usage is only a small portion of our total usage.

 

I can see my neighbours gas boiler flue from our kitchen window, and at this time of year it seems to be burning near constantly.  I am glad I don't have his heating bill.

[SteamyTea]

4 hours ago, ProDave said:

Clearly we are not "most people" then because I keep trying and failing to find anywhere we "waste" energy.  The only savings I can see is cook less, wash us or our clothes less. watch less television, don't keep food in a fridge or freezer, sit in the dark at night or sit in a cold house.

You are right. Some of us on here have already done the easy savings. The general population is entirely different.

As a slightly different example, because I am driving 600 extra miles every week, I have decided to put my 40 year old automotive engineering skills to some practical use. If I drive normally on the A30, M5, M4 and A34, then A40, I get about 45 MPG.

If I potter along and add an extra hour and a half to the journey, I can get 70 MPG.

Now I appreciate this is not a house, but expecting a little less can save a decent amount (about 40 quid a trip).

My biggest energy saving device is the Poundland washing line.

Edited December 30, 2021 by SteamyTea

[AliG]

I have been trying to switch to Octopus Go as I calculated that my per kWh cost would be around 19p.

 

They have been very slow in providing info to switch and today it seems they have increased the Go rates to 7.5p off peak 30.83p peak.

 

No point in switching now. This would give me an average price of around 24p vs the current variable price of 21p.

 

I may switch to their variable tariff just so I can more easily switch to Go if it is cheaper.

 

I wouldn't be surprised to see the cap higher than 24p in April.

[ProDave]

So are the multi rate tarrifs not restricted by the cap?

 

I was considering switching to Go myself late last year, it would have given at the time a marginal saving in the daily charge and the day rate plus the 5p night rate.  Looks like that would have been a bad move after all, and makes me very wary of these smart meter related variable tariffs.  I will be digging my heels in and refusing a smart meter for as long as I can.

[AliG]

Fixed tariffs are not restricted by the cap.

 

Many suppliers are offering crazy fixed tariffs way higher than the cap at the moment.

 

Going to check this has done me a favour though as the dodgy gits have put me onto a variable tariff that is above the price cap.

 

The price cap being expressed as a £ amount per year is a joke and makes it very hard to check that you are paying the right amount. Surely people aren't so stupid that they cannot express it as p per kWh.

 

 

 

 

[SteamyTea]

20 minutes ago, AliG said:

average price of around 24p

What I pay for EDFs day rate.

[AliG]

29 minutes ago, SteamyTea said:

What I pay for EDFs day rate.

Why are you paying above the cap?

 

So I have checked, Outfox the Market emailed me saying that if I did nothing they would put me on the Standard Variable Rate with a yearly price quoted, not a price per unit.

 

The prices are 23.3p for electricity and 4.8p for gas. These are 15% and 20% above the price cap.

 

Apparently the scam that they are running is to put you on a green tariff that is not included in the cap.

 

This kind of thing drives me up the wall. Will take loads of my time to get fixed. I will get started on the move to the correct Standard Variable Tariff at Octopus.

[SteamyTea]

11 minutes ago, AliG said:

Why are you paying above the cap?

Don't think I am. I am on a variable standard rate.

May just check again.

Every time I have looked into swapping, the most I have been able to save us £9/year. I am not going to bother for that.

I am a low user on E7, 80% of my usage is at 14p.

Edited January 5, 2022 by SteamyTea

[epsilonGreedy]

1 hour ago, AliG said:

 

The prices are 23.3p for electricity and 4.8p for gas. These are 15% and 20% above the price cap.

 

 

Something does not add up here. 40% of our electricity is generated by gas, so does the price differential point at some major inefficiency in electricity distribution?

 

Whatever the explanation the Government will have to slap a carbon tax on retail heating gas otherwise ASHP adoption will stall.

[AliG]

After a lot of work I have discovered what has happened with my rates.

 

I consider it very sharp practice and am not pleased.

 

The current price cap is oft quoted as 4p for gas and 21p for electricity.

 

However, this is actually based on a total capped price of £1277 per year less a standing charge.

 

The supplier is free to allocate the cap between the standing charge and unit price at the average consumption used for the cap. This is 3100 kWh of electricity (soon to fall to 2900 I think) and 12000 kWh of gas. I did not know that they could do this.

What my supplier has done is put me on a tariff with higher unit prices and no standing charge. At the assumed use for the price cap this would be price neutral but at my much higher usage it is considerably negative.

 

I have calculated what I would pay my current supplier - Outfox the Market and Octopus at the variable capped prices.

 

I would pay 13% of £900 less to Octopus.

 

1 hour ago, epsilonGreedy said:

 

Something does not add up here. 40% of our electricity is generated by gas, so does the price differential point at some major inefficiency in electricity distribution?

 

More than half the cost of electricity is distribution and overheads. Gas is much cheaper to distribute.

 

However, this does mean that the price of gas is going up much faster than electricity and so the differential is getting smaller. I was paying around 6x more for electricity than gas last year. It is now 5x and I expect it to fall to around 4x with the next price cap change.

 

[AliG]

Outfox The Market have confirmed that they have no tariffs with a standing charge at the moment.

 

Thus if you are a below average user, as many people of the Forum are, you could game the system and move to them to save money.

 

On the other hand if you are an above average user, like me, you should leave as they are over charging you.

 

They used to have high standing charges and low unit rates, so likely had a higher than average usage customer base. They have no doubt calculated that they can earn more under the price cap by not having standing charges.

[SteamyTea]

@AliG

There is lots of info on how i is calculated on the Ofgem site.

https://www.ofgem.gov.uk/information-consumers/energy-advice-households/check-if-energy-price-cap-affects-you

[AliG]

So with the data from the Ofgem site and looking around on the internet, the price cap is expected to rise to around £1800.

 

Up to £100 of this will be to cover the losses made by suppliers taking on customers from bankrupt suppliers.

 

To increase the price by 40% they could keep the standing charge the same and increase kWh prices by around 50% or increase both by around 40%.

 

This suggests that the new cap prices will be between 29 and 31p for electricity and 5.6 and 6p for gas.

 

Clearly the government may try and step in to do something about this, although all they could really do is use taxpayer money to pay people's bills.

[MikeSharp01]

On 30/12/2021 at 13:01, ProDave said:

Clearly we are not "most people" then because I keep trying and failing to find anywhere we "waste" energy.  The only savings I can see is cook less, wash us or our clothes less. watch less television, don't keep food in a fridge or freezer, sit in the dark at night or sit in a cold house.

I guess the emphasis is on 'Most'

[ProDave]

I have been looking at switching to a fixed tariff to "beat the next rise in the cap"

 

Presently paying 20.24p per kWh which is a capped price.

 

I could stay with Octopus and switch to "Loyal Octopus 12 month fixed" at 27.39p per kWh.

 

Why would I switch now to a higher tariff?

 

Well it's widely speculated the cap will rise in April by 50% which would take it to around 30p and then rise again in October by perhaps another 20% taking it to 36p

 

If I switch now it would put February and March this year onto the higher tariff straight away where just waiting on the capped price it would stay at 20.24p until April.  But if I switched now by next winter I could be saving 10p per kWh.

 

What I don't know is how long this Loyal Octopus fixed rate will be on offer, e.g. could I wait until March to switch?  If only I had that crystal ball?