Where is the kWh price heading in 2022?

[AliG]

Re decoupling the price paid for renewable generation from wholesale markets.

 

It looks like this is finally coming, and it will help, but not that much. The number I have seen is a couple of hundred pounds per household. Where it will really help is on the commercial side where restaurants etc often use electricity for heating and have seen bigger price increases. I saw a figure of £18bn benefit today, of which £11bn would accrue to commercial customers, this seems to be an annual figure. I also very suspicious that this plan will involve some future payments which costs us more in the long run.

 

https://www.current-news.co.uk/news/energy-sector-backs-proposals-to-lower-bills-through-new-fixed-contracts-for-generators

 

A lot of people on Buildhub have ASHPs or low heating costs, so are very focused on electricity. Most people use gas for heating in the UK and the gas price is a much tougher nut to crack.

 

The gas price ended up around 15% today. Re my comment that the news has not really reported the drop in prices, they are still using figures of £6-7000 for the cap next year. At the current price, I think the cap would be nearer £5250. By not giving a lower figure at the end of last week, they increased forecasts every day when prices went up but didn't reduce them when they fell, and telling people that gas prices are up today, the natural assumption would be that the cap will be even larger than £7k.

 

I think this is a moot point though. I suspect that plans will be put in place to mitigate increases above the October cap. The October cap is very unpleasant, but probably manageable for most people (the worst off should be protected by inflation linking of benefits and pensions, indeed it is probably the low paid who will be hit hardest without this protection). a further 50-100% increase, however, would not be manageable for a lot of people.

 

An interesting thing is that Germany has had lower price increases than us, but prices started massively higher. Their gas price in March was around 15p/kWh and their electricity price was 36p/kWh. Roughly half of the price was grid fees and renewable subsidies, hence why it started higher and is less impacted by wholesale prices. I think the gas price is now up to 18p, so still more than our October cap, the current electricity price seems to be around 40p/kWh.

[AliG]

24 minutes ago, Onoff said:

 

Does it take into account the costs upgrading the gas distribution network? Doesn't hydrogen have to be delivered at higher pressure than a lot of our infrastructure can cope with?

I doubt it, I felt it was a bit biased in favour of Hydrogen and a more likely scenario was flattish electricity prices. I actually think ex this war that is still likely. It's just the path to get there. By 2030, electricity prices will probably be back down towards 15p/kWh, maybe a bit higher after the recent bout of inflation.

 

Things go back to normal very quickly. The oil price got to $140 in 2008 with people saying that it was going to $200, calling it the "oil super spike" By 2009, it had fallen to $30.

[Radian]

11 minutes ago, AliG said:

The October cap is very unpleasant, but probably manageable for most people (the worst off should be protected by inflation linking of benefits and pensions, indeed it is probably the low paid who will be hit hardest without this protection)

Well I'm truly shafted for one. Two years before state pension, medically retired but only have non-income related ESA to help and council tax band G so dip out on every single bit of support currently available Think I'll try and get in an old folks home over winter.

[Onoff]

1 hour ago, SteamyTea said:

Why would you pump it. Making on sight would be easier.

 

Using electricity, cos that's cheap???

[SimonD]

2 hours ago, AliG said:

If you build renewables in the UK you will get a decent return on investment. No need for government investment,

 

If you take into consideration the entire infrastructure together with all the structural reforms required to make the Net Zero shift, I'd reckon the total bill is way beyond private investors. They will and are cherry picking the bits most lucrative. The reality is that private investors don't like early stage risky high capital bets. But instead of me jabbering on, it's probably better to quote from a pieve by Aviva Investors for COP26:

 

Quote

In the government’s strategy paper, only offshore wind is considered “capital markets” ready, while low-carbon hydrogen, CCUS, advanced nuclear, long-term storage, electrification of transport and energy efficiency are not yet proven commercial propositions.

The strategy sets out how different sources of capital change as sectors mature. The majority of institutional investor capital is seen to be capable of being mobilised as a sector moves to being delivered at scale (and ultimately to a mature state) when the public capital requirement becomes minimal or disappears...

While the strategy highlights the recently established UK Infrastructure Bank as capable of playing a pivotal role in being able to kick start new sectors, details on how it will seek to ‘crowd-in’ private capital will also be eagerly awaited by investors.

 

This outlines that in order to make the technology being relied upon to even get close to Net Zero, a lot of very expensive technology needs to be developed, tested and then scaled in order to make it attractive to the investors to take it forwards.

 

This pattern is fairly well backed up by history.

 

I'm not trying to be a naysayer, but there's a good number of proposals coming out about how it's going to be achieved, including by governments, that are frankly pretty naive.

[Temp]

Perhaps of interest. Ripple energy allow you to buy a share in a wind farm.

 

https://rippleenergy.com/

 

https://rippleenergy.com/how-it-works

 

 

[Marvin]

11 hours ago, SimonD said:

I'm not trying to be a naysayer, but there's a good number of proposals coming out about how it's going to be achieved, including by governments, that are frankly pretty naive.

Unfortunately it's the nature of politics to talk about what the people want and not what the people need in their lives. 

 

It's one of the jobs that you get by being popular.

[SimonD]

16 hours ago, jack said:

 

With what though? Where is the money going to come from in the next handful of years given how deep in the hole we already are with energy, the NHS, etc (etc, etc, etc)? It's the apocryphal story of asking the farmer for directions and being told "Well I wouldn't start from here".

Imagine if we'd spent all the HS2 money, and 90% of the track and trace + PPE scandal money on renewables?

 

I would take the radical position 😄. We need some serious structural reform to deal with the current situations. The energy market is dysfunctional and I'd also say that the way that capitalism has morphed is more like cancer than a benefit to the world and society at large. Central to this is the problem of economics which has, for whatever reason, taken centre stage in pretty much every single human activity and is now treated as if it were some immutable natural force. In the words of Keynes himself we should not 'overestimate the importance of the economic problem, or sacrifice to its supposed necessities other matters of greater and more permanent significance.'

 

But yeah, if there wasn't such huge waste during Covid, there'd be a bit more cash to splash on renewables and all the other things. 😊

Edited September 6, 2022 by SimonD

[SimonD]

27 minutes ago, Marvin said:

Unfortunately it's the nature of politics to talk about what the people want and not what the people need in their lives. 

 

It's one of the jobs that you get by being popular.

 

Yeah, I think this reflects probably the biggest problem we face, which is that it's a political and social problem being tackled as if it were a technical one. We've had the technology for a while now..... we all must really know the missing piece.

[SteamyTea]

25 minutes ago, SimonD said:

 

Yeah, I think this reflects probably the biggest problem we face, which is that it's a political and social problem being tackled as if it were a technical one. We've had the technology for a while now..... we all must really know the missing piece.

On today's Life Scientific there was some American saying the science is easy, it is people that are hard.

[AliG]

Well when people constantly blame renewables for the problem, even though they are clearly part of the solution, it shows the problem you have in dealing with people. Just like the COVID vaccine issue all over again. Sadly people are too easily swayed by rabble rousing media and don't have enough grasp of the technicalities of the issue. I tend to feel its not quite as bad in the UK as in the US, there seems to be a bot more respect for science here.

 

I don't really think the energy market is structurally dysfunctional, it has worked fine historically in the UK, we had quite low and stable prices. However, like many systems it was not set up with unexpected events in mind and there are clearly improvements that can be made such as not linking the price of renewables to the price of commodities. This change had already been made on a go forward basis. Of course you might agree that Russia restricting exports was a foreseeable event.

 

I do agree that you cannot use capitalism to fix everything. I find the US attitude to healthcare bizarre. There are literally people who believe that if you cannot afford healthcare for your own family that you are a "loser" and it is your own fault. It simply is untenable to have people who earned $15 an hour afford to pay for healthcare out of their own pocket when doctors earn over $400k a year and drugs cost $60k. But capitalism is an easy way to signal what people want money spent on without bureaucracy getting involved.

[SteamyTea]

4 minutes ago, AliG said:

capitalism is an easy way to signal what people want money spent on without bureaucracy getting involved

Well, my shoes, they come from Singapore
My flashlight's from Taiwan
My tablecloth's from Malaysia
My belt buckle's from the Amazon
You know, this shirt I wear comes from the Philippines
And the car I drive is a Chevrolet
It was put together down in Argentina
By a guy making thirty cents a day

Well, it's sundown on the union
And what's made in the USA
Sure was a good idea
'Til greed got in the way

Well, this silk dress is from Hong Kong
And the pearls are from Japan
Well, the dog collar's from India
And the flower pot's from Pakistan
All the furniture it said 'Made in Brazil'
Where a woman, she slaved for sure
Bringing home thirty cents a day to a family of twelve
You know, that's a lot of money to her

Well, it's sundown on the union
And what's made in the USA
Sure was a good idea
'Til greed got in the way

Well, you know lots of people are complaining that there is no work
I say, "Why you say that for
When nothing you got is US made?"
They don't make nothing here no more
You know, capitalism is above the law
I say, "It don't count 'less it sells"
When it costs too much to build it at home
You just build it cheaper someplace else

Well, it's sundown on the union
And what's made in the USA
Sure was a good idea
'Til greed got in the way

Well, the job that you used to have
They gave it to somebody down in El Salvador
The unions are big business, friend
And they're going out like a dinosaur
But they used to grow food in Kansas
Now they grow it on the moon and eat it raw
I can see the day coming when even your home garden
Is gonna be against the law

Well, it's sundown on the union
And what's made in the USA
Sure was a good idea
'Til greed got in the way

Democracy don't rule the world
You better get that in your head
This world is ruled by violence
But I guess that's better left unsaid
From Broadway to the Milky Way
That's a lot of territory indeed
And a man's gonna do what he has to do
When he's got a hungry mouth to feed

Well, it' sundown on the union
And what's made in the USA
Sure was a good idea
'Til greed got in the way

[Onoff]

[SimonD]

32 minutes ago, AliG said:

But capitalism is an easy way to signal what people want money spent on without bureaucracy getting involved.

 

https://www.ft.com/content/73212b74-c1ba-11e4-8b74-00144feab7de 😁

[jack]

1 hour ago, SimonD said:

I would take the radical position 😄.

 

So would I, but no government (any government, although the batch of Tories we've had for the last few years is particularly bad) is brave enough to be honest with people about what we need to do.

 

I'd add that we're so far down the wrong path that I just don't see way out that involves less than a decade of significant pain.

[Pocster]

[Ferdinand]

17 hours ago, Radian said:

Well I'm truly shafted for one. Two years before state pension, medically retired but only have non-income related ESA to help and council tax band G so dip out on every single bit of support currently available Think I'll try and get in an old folks home over winter.

 

Shouldn't that make you one of the max beneficiaries of whatever package emerges?

 

Council Tax band G is a bit steep, especially as a lot of current attractive sounding argumentation is about levelling up Council Tax to be proportional to property value.

 

I had sight of some property taxes in the US the other day whilst comparing the areas around New York and London. In Montclair NY they seem to be about 5x what they are here in the equivalent area for the equivalent house.

[Ferdinand]

52 minutes ago, SimonD said:

 

https://www.ft.com/content/73212b74-c1ba-11e4-8b74-00144feab7de 😁

 

That's David Graeber, a self-proclaimed anarchist who was a player in Occupy, amongst other things. 😆

 

Not going down *that* rabbithole. 🙂

[SteamyTea]

1 hour ago, jack said:

I just don't see way out that involves less than a decade of significant pain.

All I have heard for the last 7.

Still not seen hell in a hand cart.

[jack]

6 minutes ago, SteamyTea said:

All I have heard for the last 7.

Still not seen hell in a hand cart.

 

It hasn't happened yet, so it won't happen. Got it.

[Radian]

51 minutes ago, Ferdinand said:

Shouldn't that make you one of the max beneficiaries of whatever package emerges?

The council tax rebate only applies to bands A-D as It's presumed owners of houses in higher bands are well-off. Not people who's circumstances have changed but who's properties haven't. Only those people on means tested benefits get Pension Credit and Tax Credits. Non-income related ESA awarded for being medically retired isn't means tested. Unless some other scheme is announced I'm having to tough it out on dwindling savings. Or be forced to sell-up.

[Onoff]

You would like to think that skyrocketing energy prices have made people rush out en masse to insulate their homes, fit PV etc. I bet in reality the majority haven't. Partly its a double edged sword in that that money is needed to pay for the rise in energy costs. Coupled of course with general apathy that the government will do "something". LT will likely curb the increases and spread the payback burden into the future. She'll be popular for a bit.

 

The majority of the country will go back to contended bliss, turn the thermostat up and let all the heat out when the Deliveroo driver turns up.

 

I don't feel so silly I must admit about buying the 6kVA diesel genie now as an aside. 

 

As an aside, are the Chinese playing the long term energy game? We all fit and become reliant on PV then in 20 years time can't get panels, inverters, spares etc? Are we going to see lithium supplies used as a bargaining chip down the line. Look at the inroads China is making in South America and Africa. 

 

I'm rambling as usual!

[SteamyTea]

31 minutes ago, Onoff said:

Are we going to see lithium supplies used as a bargaining chip down the line. Look at the inroads China is making in South America and Africa. 

Corneal has lithium in abundance. No good Chinese restaurants though.

 

[Pocster]

Wish I had the foresight to install PV and batteries .

[joe90]

5 minutes ago, pocster said:

Wish I had the foresight to install PV and batteries .

🖕