Where is the kWh price heading in 2022?

[SteamyTea]

4 minutes ago, ProDave said:

taking it to 36p

At that price, a diesel generator is viable.

And you can get some thermal energy off it.

 

I think that basic unit prices will drop in the next 18 months.  Future prices are currently 2/3^rd of the November peak price.

http://www.livecharts.co.uk/daily_charts/daily_charts.php

[NSS]

On 05/01/2022 at 10:14, ProDave said:

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.

 

Dave, I switched to Go from Agile when prices started to soar last Spring. It's fixed until this August and my latest bill (earlier this week) shows I'm paying an average of just under 12p per unit at present. I run the ASHP for DHW in the cheap 4-hour period each night and supplement this via solar when available. This way, circa 33% of our energy import is at the cheap rate.

[ProDave]

I just emailed Octopus.  They said the variable rates on offer could change at any time and could not say how long this present offer will be available.

 

What they did offer however was to apply this present fixed rate offer to my account but to take effect from the end of February.  So it would lock in this potentially money saving rate from March onwards so there would only be one "penalty month" where I was paying above the capped variable rate.

 

And if my crystal ball and the press speculation is wrong, and the cap rises from April onwards at substantially less than 50%, with Octopus there is no penalty for exiting a fixed rate so I could drop back to the capped variable rate if it did prove lower.

I will go and check my usage and do some sums......

 

To aid my calculations, does anyone know when the cap on the variable rate actually rises?  the press just says "April" but what date in April?

[epsilonGreedy]

4 hours ago, AliG said:

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

 

 

I heard much the same from Martin Lewis on TV, he said the pricing formula is well know and works on 6 month average. At this point it is difficult for the April price to land outside a 40% to 50% range. Martin Lewis also said follow Cornwall Insight to understand the energy market, no not this one @SteamyTeathis one https://www.cornwall-insight.com/price-cap-set-for-46-rise-for-summer-2022-winter-2022-23-cap-may-exceed-2000/

[recoveringbuilder]

57 minutes ago, ProDave said:

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?

Did you not watch Martin Lewis the other night talking about this?

[ProDave]

9 minutes ago, recoveringbuilder said:

Did you not watch Martin Lewis the other night talking about this?

I did not watch him but read his newsletter on the subject.  He concluded the fixed rates on offer were too high for this strategy to work for most, with the possible exception of the Loyal Octopus fixed on offer.  That is what made me go and look at it.  and indeed it looks like it could work.

 

By comparison, the  "standard" fixed rate on offer by Octopus is 37.6p per kWh (presumably that is the rate on offer to new customers)  That higher rate fix would not work. It would still likely be higher this time next year after 2 rises in the cap so as Martin points out it would not be a viable switch.

[Ferdinand]

2 hours ago, epsilonGreedy said:

 

I heard much the same from Martin Lewis on TV, he said the pricing formula is well know and works on 6 month average. At this point it is difficult for the April price to land outside a 40% to 50% range. Martin Lewis also said follow Cornwall Insight to understand the energy market, no not this one @SteamyTeathis one https://www.cornwall-insight.com/price-cap-set-for-46-rise-for-summer-2022-winter-2022-23-cap-may-exceed-2000/

 

Correct. He's been a bit of a Jeremiah on the inertia built into the systems since last Sept / Oct. He says It will stay high for 6 months because it is set according to 6 months of data.

 

To my eye that means that the formula can be adjusted, for example by a one off or short term change. 

 

I'm not worried that some intermediary companies have gone bust; there are still more left than anywhere else has and the trend everwhere is towards a more open market, even in France with its unreformed economy. Essentially the ones that went bust used their capital to give their customers cheaper prices than turned out to be justified given their setup.

 

We'll be paying high wholesale prices for it, but we'll be using quite a lot less of it given energy trends - which will help with bills. And we have an extra 10% of renewable / nuclear Electricity Capacity coming on stream soon from offshore wind and the interconnector being repaired. That will reduce the gas we use to make electricity. And summer demand for energy is much lower than winter.

 

UK boss of Centrica was saying it could last 2 years, and that lots of costs must be taken off Centrica and similar. Just another subsidy-seeker.

 

Mons. Macron just pulled an interesting trick. He has told EDF (French nuclear monopoly) to supply 20TWh of power to distributors at reduced cost. That is, about 5% of total French Elec usage in one year. The boss of EDF says it will lose his company nearly 10 billion Euro, and it immediately cut the share price by 25%. Given that 85% of EDF is owned by the French government, it is a transfer from Govt assets that does not appear on any borrowing numbers. Just call him Emmanuel Broon.

 

There are plenty of ways for the Govt to keep bills down. I would do it for 6 months then reassess as demand comes back in the winter. Politically they are in such a hole that they need to stop bills going any higher than the current cap imo.

 

All interesting stuff. The question is whether our current Boris Govt has the competence to do something practical, or whether BJ will refuse to do it and lose the political benefit, then be forced to do it anyway. He's enough of a shortsighted divot.

 

F

 

[AliG]

OFGEM will announce the new cap around the 7th February and it will run from the 1st April for 6 months (Unless the system changes).

 

I don't understand the call that the cap could rise substantially again in October 22 as the wholesale price of gas and electricity have fallen recently. They are around double where they were in August when the cap was last set and the level in August was around double the historic level.

 

As the previous cap included £528 of wholesale costs and the wholesale price has roughly doubled then you can expect the cap to go up by around £500.

 

A month ago wholesale prices were much higher again, but if current levels hold then the cap will peak out around this level, events in Ukraine may have a bearing on this!

 

With 28m households in the UK, every £100 on bills is £2.8bn, so it is not that easy to fix this. This is almost exactly equivalent to 0.5% in income tax payments. So to keep bills at current levels would be equivalent to a 2.5% tax cut.

 

People on pensions/benefits should see their payments increased by inflation, which will take this into account to some extent. There is the problem that their inflation rate may be higher as utilities are a bigger proportion of their costs. The point is though that if the government then also subsidises utility bills then these people will get a double counting in the benefit which will have to be paid for tax payers. As ever the government does not actually have any money. When the government pays for something it just takes money from some tax payers and gives it to some other taxpayers.

 

You also have the problem of what happened with Universal Credit. Once you give people a benefit like this they won't want it taken away. I think this issue in particular will make the government wary of making large "temporary" adjustments.

 

Basically I don't now what the government will do! (One solution would be to allow utilities to borrow to pay for the wholesale costs today and pay it back from future bills. This would spread the cost over time, but mean bills would be higher for longer)

 

The best thing to do in the long run is actually considerably more investment in wind energy as this has considerably more fixed costs and is not impacted by global commodity prices.

 

Expediency suggests not arguing with Russia until we have fixed the issue of being dependent on their gas. It doesn't actually matter where the UK specifically gets its gas from, as gas is priced on global markets. If Russian gas goes up in price all gas goes up in price. The fact that basically every government in Europe has allowed themselves to get into this situation shows how hopeless they are. If you look for example at Rolls Royce (and they are by no means a well run company) they do understand that the pound/dollar exchange rate has a massive impact on their business and they have a massive multi billion pound hedge in place to mitigate against this.

[Ferdinand]

@AliG

 

The boss of Centrica was wailing about the price of wholesale gas staying high for 'up to two years' on R4 this week - Today Programme. Presumably in search of lower taxes on gas and more free money. And predicting bills of £2,000.

 

Unfortunately the BBC parrot presenter did not challenge his facts or his motives.

 

Can you make like Putin and block your pipeline ? ? I think you have one next to your house?

 

[Temp]

What's the story with Nord Stream 2? Russia appear to be saying there is loads of gas ready to go through the pipeline if Germany would allow it. Some reports say its been completed but needs German approval. 

[Temp]

Can't always believe the Russians but..

 

https://www.lombardodier.com/contents/corporate-news/investment-insights/2021/november/nord-stream-2-stalls-on-german-a.html?gclid=CjwKCAiA_omPBhBBEiwAcg7smYGICvI8zJZh5RSeL8ZJtGVyR1b_xbrqk5cXhEk3IsqRdENtXGq38xoC3NYQAvD_BwE

 

Approval delay

 

In response to rising demand for gas, at the end of last month Gazprom said that it has increased production by nearly 17% in 2021, compared with a year earlier. In October, Russian President Vladimir Putin said that Russia would further increase supplies of natural gas once capacity through the new pipeline comes online.

On 16 November, Germany’s network regulator suspended its Nord Stream 2 approval process. A statement said that since the Gazprom subsidiary operator is not based in Germany, its certification would wait until the operator has established a legal base there.

[Ferdinand]

1 hour ago, Temp said:

What's the story with Nord Stream 2? Russia appear to be saying there is loads of gas ready to go through the pipeline if Germany would allow it. Some reports say its been completed but needs German approval. 

 

Russia was effectively "working to rule" on their previous Nordstream 1 contracts to apply pressure (or as they claimed 'rebuild reserves').

 

Germany (Merkel and Gerhard Schroder her predecessor (?) ) had built Nordstream 2 in the teeth of EuCo opposition, and thrown Ukraine under the bus by making it possible for Russia to pivot to Nordstream 2 instead, which would cost Ukraine a couple of billion Euro a year in transmission fees. Schroder was employed by GazProm on a generous salary (600k Euro a year iirc) to help their Nordstream project.

 

To the extent that a billion Euro compensation package was being set up for Ukraine.

 

The new German Govt and especially the new Green Party FM (Fraulein Baerbock) is stronger towards Russia, and even under Merkel they had done a semi-reverse-ferret by being tough on regulation to try and put some back pressure on Russia.

 

Germany has also - unlike a lot of European countries - failed to build LNG import terminals (we, for example, have 3 big ones, and pipelines from Norway and Holland plus our own remaining supply), and so have Russia's apron strings somewhat tied around their neck in a noose. We get a lot of our LNG from Qatar, Norway and the USA in tankers. There are a lot of USA gas wells coming back on stream this year after COVID which will help.

 

LNG terminals:

https://www.natlawreview.com/article/lng-europe-2021-current-trends-european-lng-landscape-and-country-focus#:~:text=The current large-scale LNG,

 

Also Germany has a crunch because they decided to close all their nuclear power stations after the Japanese nuclear accident and keep lignite power stations open, and are now rushing to close those coal power stations a decade earlier than they were planning (2028 not 2038 roughly I think), for Green and possibly embarrassment reasons. They just closed 3 former GDR nuclear power stations (to be fair, they needed closing).

 

So in the absence of Plan B, they need loadsa-naturalgas from somewhere.

 

Plus Holland - a key source of gas for DE - are now running down their gas fields for green reasons. And there is pressure to keep them open, but earthquake problems in local towns.

 

Plus there's all the Russian sabre-rattling on Ukraine, and Germany was preventing defensive weaponry being supplied to Ukraine via NATO schemes. 

 

Plus UVDL rather trashed the German armed forces in a previous position as German Defence Minister before she trashed the European Commission's vaccine procurement programme. They are still flapping around about a fighter procurement decision that should have been made more than a decade ago, and someone decided "no F-35s" and made a political announcement that makes it embarrassing to reverse-ferret on that one.

 

It's all a bit of a complicated Dachshund's Breakfast, and not really the sort of comprehensive mess that Germany is in the habit of making.

 

And now they have Mr Macron prancing around trying to turn the EU into a kind of Greater France Mk 2, at least for the next 6 months. All he needs is a Cuirassier's Uniform and a Martini-Henry rifle and he'll be as happy as a ranting hippo in a mud lagoon.

 

Although we are not dependent on Russian Gas, we are impacted by contracts set with reference to the international price.

 

Germany need to build some LNG import capability pronto, and drive real Green Energy as fast as possible - but that will take at least a decade or two to really have a big impact. We got we are today by being the single country in the world with the biggest investment every single year in offshore wind from 2015 to 2020 as the implementation phase of rolling waves of contracts, and we are due to add another 250% to our current offshore capacity by 2030. I see Germany doing a dash for gas in some way.

 

For fairness, I should also perhaps note that we imo cocked up by not keeping a serious strategic buffer of gas; we chose to close our end-of-its-life facility in approx 2015. I think history shows that to be an unwise decision - a 90 day rather than 9 day buffer would have helped us last year, and we should have leased a tanker full of gas as our reserve.

 

F

[ProDave]

So it's the greens wot dun it forcing / embarrassing everyone to abandon fossil fuel and nuclear BEFORE the alternatives are ready.  Even though we are going as fast as we can with the alternatives.

[Ferdinand]

23 minutes ago, ProDave said:

So it's the greens wot dun it forcing / embarrassing everyone to abandon fossil fuel and nuclear BEFORE the alternatives are ready.  Even though we are going as fast as we can with the alternatives.

 

In Germany I would put the decisions down to the Govt in power in 2014, rather than the Greens - who are only in Govt this year. But the German Greens are of the Realistic Green variety. Though they and German politics undoubtedly helped the groundswell.

 

Germany also has the added pressure that they have higher power usage compared to other large European countries, due to their larger manufacturing base etc. Means they need a lot more windfarms per pop. Though again TBF Germany are strong on things like onshore wind.

 

They also benefit less from exported emissions.

 

The ones sitting most pretty at the moment are probably the French with their 70% nuclear, and 3-4 bn of electricity exports, and the Norwegians with their oil and their gas and their hydro.

 

 

[Ferdinand]

5 hours ago, AliG said:

Basically I don't now what the government will do! (One solution would be to allow utilities to borrow to pay for the wholesale costs today and pay it back from future bills. This would spread the cost over time, but mean bills would be higher for longer)

 

IMO BoJo has got himself and his Govt into such a stinking political cesspit that he needs to stop their being any further energy price rises at all. Or whoever replaces him when he gets defenestrated will have little chance of winning the next election.

I argued above that there are various things that can be done, as there is a fair chance that this will ease in this country to an extent for the summer, and *maybe* after autumn.

 

The biggest Boris problem is that though he proved a decent marketeer to get Brexit over line (whatever your view), he is as competent at running a Government as a ... choose your simile.

[Radian]

2 hours ago, Ferdinand said:

IMO BoJo has got himself and his Govt into such a stinking political cesspit that he needs to stop their being any further energy price rises at all.

 

I agree. In a way these energy price rises feel bigger to me than the oil crisis in '73. It couldn't get much worse - other than if the gas and electric actually stopped flowing as well.

[epsilonGreedy]

If the kWh price climbs past £0.30 will the traditional cry of of the Rag & Bone Man change from "any old iron" to "any old air source heat pumps"

[ProDave]

On a serious note, I have just fixed my electricity rate to try and beat the rise in the cap as I discussed a few posts above.  My new fixed rate will start at the end of February so I will be paying a little over the odds for March.  But i put the last 12 monthly usage figures into a spreadsheet and as long as the capped price rises by 40% in April it will be cheaper with my capped rate.  And that spreadsheet did not allow for a possible October rise so if that happens the saving could be even more for next winter.

[recoveringbuilder]

1 hour ago, ProDave said:

On a serious note, I have just fixed my electricity rate to try and beat the rise in the cap as I discussed a few posts above.  My new fixed rate will start at the end of February so I will be paying a little over the odds for March.  But i put the last 12 monthly usage figures into a spreadsheet and as long as the capped price rises by 40% in April it will be cheaper with my capped rate.  And that spreadsheet did not allow for a possible October rise so if that happens the saving could be even more for next winter.

I’ve been with OctopusEnergy for a couple of years now, my fixed tariff ended in October last year and what they were offering then was twice what I’d been paying so I went on to the variable rate which is currently just under 20p but they are no longer offering me a fixed rate, will I need to email them and see what they’re going to offer?

[SteamyTea]

@ProDave is in Scotland, they frequently have a surplus of power.

 

[recoveringbuilder]

7 minutes ago, SteamyTea said:

@ProDave is in Scotland, they frequently have a surplus of power.

 

I’m in Scotland too?

[SteamyTea]

2 minutes ago, recoveringbuilder said:

I’m in Scotland too?

Bad luck, but you might get cheaper power.

[Adsibob]

On 05/01/2022 at 10:14, ProDave said:

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.

What’s your concern about smart meters; I really like having one.

[ProDave]

17 minutes ago, SteamyTea said:

Bad luck, but you might get cheaper power.

The irony is we pay more than most other parts of the UK in the form of the distribution cost.

[SteamyTea]

8 minutes ago, ProDave said:

The irony is we pay more than most other parts of the UK in the form of the distribution cost.

Same down my way.

Odd really as there are two huge connections for the old Hayle power station. Meant to be a nuclear plant there but we are too radioactive.