Where is the kWh price heading in 2022?

[SteamyTea]

3 minutes ago, Marvin said:

I make a 100% loss producing quotes and a profit from awarded contracts. So What!

Do you have two separate businesses, one for quotes and one for contracts.

 

I just hope my pension find invested wisely in energy production companies, and now pulls out of them.

[SimonD]

Here's a quite amusing take on the whole energy market thing and why that so called seperation of businesses between enrgy producer and supplier is essentially a false one:

 

 

[AliG]

Great news, not reported, is that wholesale prices continue to fall.

 

At this rate I would expect around a 40% drop in prices next winter.

 

Electricity futures are around 16p, this would equate to around 20p/kWh at retail.

 

Gas futures are around 127p which equates to around 6p/kWh at retail.

 

Due to the lagging nature of the price cap it may go up a little before it goes down.

 

The funny thing is that these prices are still well above three years ago, but will feel like a bargain relative to recent prices.

 

I have to note that some idiots wanted to reconstruct with generators last august which would have locked in those prices for the next 15 years costing over £100bn. Prices are already down around 80% since then. It seems to me that the massive spike last summer was caused by Germany setting aside money to guarantee that they filled their storage. People knew they had to buy whatever the price and took advantage.

 

 

]]

 

[SteamyTea]

2 minutes ago, AliG said:

not reported

It was on Radio 4.

 

[AliG]

12 minutes ago, SteamyTea said:

It was on Radio 4.

 

I'm more of a Sky News guy.

[SteamyTea]

2 minutes ago, AliG said:

I'm more of a Sky News guy.

Well there you go.

 

Radio 4 has quite a lot of information about energy prices.

Generally good.

Edited February 21, 2023 by SteamyTea

[Kelvin]

2 minutes ago, SteamyTea said:

Well there you go.

 

Radio 4 has quite a lot of information about energy prices.

Generally good.

It’s been all over various news channels for several days. 

[SteamyTea]

2 minutes ago, Kelvin said:

It’s been all over various news channels for several days. 

Except Sky News then.

[AliG]

We were away on a cruise last week and in Dubai at the end of it, so probably not watching as much news as normal.

 

I doubt they were as excited about this news in the Middle East.

[SteamyTea]

6 minutes ago, AliG said:

I doubt they were as excited about this news in the Middle East.

Where we are buying a lot of our gas from now, so probably very excited.

Excited does not have to mean happy.

Though I would rather sell ten times as much of a penny product for 6p, than a quarter of that for 15p.

Oil and Gas production is a marginal returns on capital investment business, not the same model as selling vegetables from the corner shop.

[andyscotland]

3 hours ago, AliG said:

I have to note that some idiots wanted to reconstruct with generators last august which would have locked in those prices for the next 15 years costing over £100bn. Prices are already down around 80% since then. 

 

I assume you mean re the proposals to change renewable/nuclear generation pricing so it is not based on gas price. Surely that cost very much depends on the terms of the recontracting and on how hard a bargain is driven by either side. It was always known that the spike would likely drop at some point, and that could have been priced in to any deal.

 

However much the gas price drops, it is never realistically going to go below the marginal cost of renewables generation, even allowing for a return on the capital investment.

 

I still believe, perhaps idiotically, that it would be better all round to remove the link between gas prices and renewable energy generation prices.

 

Also worth noting that in many businesses & economies there is also a value to predictability : a small cost premium may be worth paying if it reduces volatility (which can have much higher short & long term costs than just the price spike itself).

[AliG]

3 hours ago, andyscotland said:

 

I assume you mean re the proposals to change renewable/nuclear generation pricing so it is not based on gas price. Surely that cost very much depends on the terms of the recontracting and on how hard a bargain is driven by either side. It was always known that the spike would likely drop at some point, and that could have been priced in to any deal.

 

However much the gas price drops, it is never realistically going to go below the marginal cost of renewables generation, even allowing for a return on the capital investment.

 

I still believe, perhaps idiotically, that it would be better all round to remove the link between gas prices and renewable energy generation prices.

 

Also worth noting that in many businesses & economies there is also a value to predictability : a small cost premium may be worth paying if it reduces volatility (which can have much higher short & long term costs than just the price spike itself).

It was this plan here which I discussed on p26 and 27 of the thread.

 

https://www.theguardian.com/business/nils-pratley-on-finance/2022/aug/30/wanted-a-new-energy-contract-for-renewables-and-nuclear-projects

 

The basic suggestion was that generators currently making excess profits would agree to new CfD contracts at around £162 per Mwh. The current CfD contracts last for 15 years and it was suggested that these new contracts would be at least as long or longer.

 

The argument given was that generators would give up short term profits in exchange for longer term price certainty.

 

My point was that £162 was although apparently cheap at the time was vastly above long term energy prices and we would simply be locking in a temporary issue for the next 15-20 years. My suspicion was it was a plan suggested by energy producers who knew what was going on. Politicians of course can be easily attracted to plans that make things look better today whilst giving someone else a problem in the future.

 

Anyway, so far I look correct with wholesale prices already well below the mooted £162.

 

There was a review going on that was supposed to set the new contracting process for renewables that would get away from them being priced against gas. I have not seen any results from this, I need to look. I believe that already new capacity is priced in a different way and as capacity continues to increase more and more capacity will not be impacted by the gas price. I have forgotten now though as I read about this in August.

 

 

[SteamyTea]

I am sure I read on here that we were going to run out of energy this last winter.

We didn't.

Seems that coal usage was down as well, again.

 

Edits by Mods to remove full article, provide precis and a link to the full article.

 

"Europe faced an energy crisis six months ago when spiking gas prices, compounded by a once-in-500-year drought, threatened the continent with rolling blackouts and fuel shortages. However, the feared crisis never came to pass due to the mild winter weather reducing demand and high prices pushing energy users to cut back even further. The drop in demand also prevented a resurgence of coal, and renewables, particularly solar, stepped in to save the day. The rollout of renewables and energy efficiency measures is essential to ensure supply keeps up with growing demand, but the weather could still cause major disruption. Europe must bank as much gas as possible for winter, particularly if the summer brings another intense drought. Despite this, energy analysts remain optimistic that Europe won't face a similar situation to last year." (ChatGPT used to create precis, 04.04.2023)

 

Link to full article here: https://www.newscientist.com/article/2366020-europe-survived-its-winter-energy-crisis-but-what-happens-next-year/ 

 

 

[SteamyTea]

Just got my new, after April Fool's day electricity prices from EDF.

 

I was paying;

 

Meter Rental 59.1

Day Rate 54.16

Night Rate 13.01

 

Now (1/412023)

Meter Rental 65.19

Day Rate 48.59

Night Rate 15.06

 

Some days I am going to be pay twice as much to be connect than I actually use.

 

[ProDave]

I am paying  32.56p/kWh  and 57.33p/day standing charge.

 

You are paying 16p more for your day rate.  You would have to be using a lot more off peak than day rate to make that worthwhile.

[SteamyTea]

13 minutes ago, ProDave said:

I am paying  32.56p/kWh  and 57.33p/day standing charge.

 

You are paying 16p more for your day rate.  You would have to be using a lot more off peak than day rate to make that worthwhile.

Yes, but I do use >80% night rate.

 

I could reduce the price by going on a monthly direct debit, but last time I did that it cost me £90 in bank charges.

 

I am also in one of the most expensive region for electrify, so may not get a good deal.

Last time I looked, with my usage profile, I could have saved £9/year, with my same supplier.