Where is the kWh price heading in 2022?

[Marvin]

 

14 hours 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.

So we now have the popular choice. Let's see what happens....

[Kelvin]

The challenge with freezing the prices at the current rate is that people won’t change their behaviour to reduce their energy use. Whereas increased cost would have done. It’s not very free market economy. Therefore, the Government really needs to make it clear that freezing prices hasn’t solved the problem and everyone needs to do their bit to reduce wasted energy use. 

[SteamyTea]

4 minutes ago, Kelvin said:

challenge with freezing the prices at the current rate is that people won’t change their behaviour

While I agree with this, freezing at around double last year's prices should help.

 

I just tried to explain the difference between a 3 kW resistance panel heater and a 3 kW A2AHP, that draws 0.8 kW, to my coffee drinking mate.

He still think the resistance heater uses less and will store energy for later.

He has magical physics that can prove it is better.

He showed me a picture of his smart meter as proof. 

What he actually showed was the unit price, but has convinced himself that it is the daily total.

His bill is going to be a shock.

[Ferdinand]

37 minutes ago, Kelvin said:

The challenge with freezing the prices at the current rate is that people won’t change their behaviour to reduce their energy use. Whereas increased cost would have done. It’s not very free market economy. Therefore, the Government really needs to make it clear that freezing prices hasn’t solved the problem and everyone needs to do their bit to reduce wasted energy use. 

 

I think a bill frozen at a typical £2,500 might still do that.

 

But I'd be more attracted to say freezing the price for the first 2000 kWh of elec, and 10000 kWh of gas. Plus some targeted funding for some groups.

 

Should be implementable easily, and politically snip off both a big chunk of the cost and the 'helping rich people' jibe.

 

And will incentivise reductions.

[Kelvin]

True but the press has been full of £7000 electricity bills in January so it will feel like a let off for millions of people. The Government is also in a quandary as it now needs to keep this cap in place more or less. Therefore it needs to use the next 6-9 months to work with the energy industry to come up with a complete overhaul of the charging schemes. Just as well we have the renewable energy champion Smaug in charge of energy now. 🙄No doubt he’ll be re-opening coal mines and encouraging Londoners to burn it. 

[Ferdinand]

18 minutes ago, Kelvin said:

True but the press has been full of £7000 electricity bills in January so it will feel like a let off for millions of people. The Government is also in a quandary as it now needs to keep this cap in place more or less. Therefore it needs to use the next 6-9 months to work with the energy industry to come up with a complete overhaul of the charging schemes. Just as well we have the renewable energy champion Smaug in charge of energy now. 🙄No doubt he’ll be re-opening coal mines and encouraging Londoners to burn it. 

 

Yes but the £7000 is media-wazzocks, wazzocking.

 

I'm quite interested in why Rees-Mogg has been made Business Secretary. He is a good investor, but I'm not sure that is the skillset needed for a period that needs mainly long-term strategy plus diplomacy. I guess he is used to dealing with large projects, though.

 

Penny Mordaunt as Leader of the House should be interesting; she can be quite vigorous. I think we can expect to see some pompous shadow ministers being thoroughly debagged.

 

 

[Kelvin]

What’s interesting about the Smaug appointment is that it doesn’t include climate as that’s been given to Graham Stuart who will attend cabinet meetings. 

[Ferdinand]

Just now, Kelvin said:

What’s interesting about the Smaug appointment is that it doesn’t include climate as that’s been given to Graham Stuart who will attend cabinet meetings. 

 

Thank-you - I hadn't spotted that.

[Stones]

1 hour ago, Ferdinand said:

 

I think a bill frozen at a typical £2,500 might still do that.

 

But I'd be more attracted to say freezing the price for the first 2000 kWh of elec, and 10000 kWh of gas. Plus some targeted funding for some groups.

 

Should be implementable easily, and politically snip off both a big chunk of the cost and the 'helping rich people' jibe.

 

And will incentivise reductions.

 

Agree that this would be a far better approach. The only snag then becomes how to address the disparity that will arise for those who do not use / have access to gas. Fairly easy to address given utility companies know who has gas and who does not.

[Ferdinand]

La Truss has cover for introducing a levy on non-gas Energy Producers from EuCo, it seems:

 

https://www.ft.com/content/ab469e2d-8e87-44ee-855b-f46b5b2dd17e

----------------------------------

EU seeks windfall tax trigger well below market rate

Brussels wants to hit non-gas power generators with new levy to help households through the energy crisis

[SteamyTea]

1 minute ago, Ferdinand said:

La Truss has cover for introducing a levy on non-gas Energy Producers from EuCo, it seems:

 

https://www.ft.com/content/ab469e2d-8e87-44ee-855b-f46b5b2dd17e

 

Can you just copy and paste the article.  Most people don't feel the need to add to the Murdoch Millions.

[Ferdinand]

5 minutes ago, SteamyTea said:

Can you just copy and paste the article.  Most people don't feel the need to add to the Murdoch Millions.

FT is not owned by Murdoch. Surprisingly it is owned by Nikkei.

 

Unfortunately no one else buys me a FT sub, so that's all I can see. It needs a subscriber who can "share" it.

 

I haven't seen it anywhere else yet, I'm afraid.

 

 

 

[SteamyTea]

28 minutes ago, Ferdinand said:

FT is not owned by Murdoch. Surprisingly it is owned by Nikkei.

I realised 30 minutes, and one nano second after posting that it was the FT, not the Sun.

[Stones]

33 minutes ago, Ferdinand said:

La Truss has cover for introducing a levy on non-gas Energy Producers from EuCo, it seems:

 

https://www.ft.com/content/ab469e2d-8e87-44ee-855b-f46b5b2dd17e

----------------------------------

EU seeks windfall tax trigger well below market rate

Brussels wants to hit non-gas power generators with new levy to help households through the energy crisis

 

If they had any sense, said generators could get out ahead of this by committing a healthy % of any excess to supplement existing support mechanisms and commit to additional generation investment, whilst still retaining some of the additional returns for their shareholders.  

 

I see Norway is now talking about below market price agreements, presumably sensing what Germany the EU will eventually get around to imposing.

[Kelvin]

We are effectively in a proxy war with Russia therefore all the normal rules for how economies are expected to work are being set aside. We are trying to collapse their economy with sanctions they are trying to collapse ours by forcing energy prices up. 
 

Insolvency groups have seen a marked uptick in SMEs who are saying they will go bust without support. 

[AliG]

1 hour ago, Kelvin said:

We are effectively in a proxy war with Russia therefore all the normal rules for how economies are expected to work are being set aside. We are trying to collapse their economy with sanctions they are trying to collapse ours by forcing energy prices up. 
 

Insolvency groups have seen a marked uptick in SMEs who are saying they will go bust without support. 

We are indeed. I think the government should have been more upfront with people that this is what are doing. Boris has tried a little to make this point recently.

 

It looks like Putin has played his last card though. The price has not gone up with the total switch off Russian supplies (see chart below) and, short of an unusually cold winter, it is unlikely to get worse from here. The price of gas is somewhat lower than it was when he first announced switching off supplies for three days two weeks ago.

 

The current price is consistent with a cap of around £5000, so a cost of £2500 per household to cap the price at £2500 equates to £70bn a year, plus the cost to help businesses. Part of the £70bn could be financed from the £18bn of changing renewables contracts and the windfall tax on energy producers. I do feel now that Putin has done his worst that gas will drift down and the cost will become lower. As ever, the government is not really bailing us out, they are simply borrowing money on our behalf. There is economic value in this though, the government has a lower borrowing rate and stabilising the economy and keeping inflation down also saves money.

 

The best thing we can do now is to continue to try and become more efficient and increase the amount of renewables in the system. The less gas we need to buy the better. I must say though that the reality is we cannot quickly add lots of renewable capacity and upgrade out housing stock.

 

As a few of us have discussed, I do wonder if not allowing the price to rise more is not the best long run decision. I would at least like to see £2500 average bills. You need this to encourage efficiency. Alternatively if you gave every household a cheque for £2000(actually £1500, above average users should get less benefit) and then said they could effectively keep it if they reduced their use of energy it might work well. But I suspect political expediency means keeping bills down is the easy option.

 

I remain hopeful the war will not last that long, I suspect the Russians will have serious issues when the temperature begins to drop in Ukraine.

 

 

[Ferdinand]

32 minutes ago, AliG said:

We are indeed. I think the government should have been more upfront with people that this is what are doing. Boris has tried a little to make this point recently.

 

It looks like Putin has played his last card though. The price has not gone up with the total switch off Russian supplies and, short of an unusually cold winter, it is unlikely to get worse from here. The price of gas is somewhat lower than it was when he first announced switching off supplies for three days two weeks ago.

....

I remain hopeful the war will not last that long, I suspect the Russians will have serious issues when the temperature begins to drop in Ukraine.

 

 

A few thouights:

 

1 - Gas is still flowing to Europe through pipelines via Ukraine, Yamal system I think. From Reuters yesterday. Presumably transit fees are still being paid. For comparison full capacity of Nordstream One is 170 million cubic m per day, so about 25% of that if I read it correctly.

 

Nominations for Russian gas flows into Slovakia from Ukraine via the Velke Kapusany border point were about 36.7 million cubic metres (mcm) per day for Tuesday, little changed from the previous day, data from the Ukrainian transmission system operator showed.

 

Russia's Gazprom (GAZP.MM) said on Tuesday that it will ship 42.4 mcm of gas to Europe via Ukraine via the Sudzha entry point, in line with the previous day.

 

Eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany at the Mallnow metering point on the German border were at 551,464 kilowatt-hours per hour (kWh/h) between 0800 and 0900 CET on Tuesday, data from operator Gascade showed.

 

You are probably better placed than me to put that in context.

 

Though I agree that Putin has shot nearly all his bolts. Once exports to Europe are zero and a decent buffer is in place, he has lost all leverage.

 

2 - I think all of this will be a good indicator of Truss's political acumen. If she keeps the option of getting a pound or thirty billion of flesh from suppliers, it is a positive sign.

 

3 - There seem to be some significant reverse ferrets on inflation predictions from commentators and forecasters on the package without the subtleties above, such as via the BBC bekow suggesting that the peak could be 10.8% rather than 14.8%.

 

https://www.bbc.co.uk/news/business-62817391

 

(LOL. I see they have now changed the headline to the doom-mongering "Bank of England warns it cannot stop UK falling into recession"). Gotta love the meeja. 

 

4. There's a bit of interesting politicking going on by France "we will exchange supportive gas exports to Germany for supportive electricity imports, as we do from Spain".

 

The electric imports are already in place, at approx 15% of French demand from those 2 sources at present. Plus another 5-6% from the UK, which for some reason did not get mentioned.

 

The Fr/De pipeline is just being finished and has very approx around 5% of the capacity of UK-continental gas pipelines.

 

5 - The North Sea Link UK-No interconnector has pretty much reversed its usual No>UKflow for much of the time at present. I assume this is to do with Norway preserving its Hydro reserves. 

 

F

 

 

[NSS]

Cracking good question from the Dorset West MP, Chris Loder, during PMQs today. Shame he tempered the impact by arris licking after the initial point.

 

If you didn’t see it live, you can watch it at 16min 30secs into the following...

 

[Gus Potter]

8 hours ago, Ferdinand said:

Though I agree that Putin has shot nearly all his bolts.

But they are a nuclear armed state. The guy probably has not much less to loose personally.

 

Yes the risk is small that this will escalate into the use of tactical nuclear weapons or an intentional realease of nuclear material into the atmosphere from one of Ukraine's reactors.. but it is not a hypothetical risk.. it is plausable.. would you gamble on 1:500 odds (year return period) .. say the same as dam failing over a small UK city? The consequences are severe.

 

Much will depend on China, not just how much influence they have over Putin but most importantly how much influence they have over who they see as the inevitable successor to Putin. That is the a big picture.

 

China will take this right to the edge and gain as much advantage as they can. I'm sure part of their calculation will be to weaken us in the west as much as they can economically, that way they will extract the most. Of course the Chinese regime are corrupt, their leaders are interested in their own personal wealth first and foremost. But what we don't know is how much risk and how far they are willing to go. Xi is up for "re election" .. he needs to play the strong man and has a bit of trouble at home.

 

If you look at it issue in this way it may be worth a discussion?

 

It may be that China offer Putin an exit.. like Idi Amin was offered and died of old age pretty much. That is one possible outcome that could go a long way towards stabalising the current situation.

 

 

 

 

 

 

 

 

 

 

Edited September 7, 2022 by Gus Potter

[Ferdinand]

1 hour ago, NSS said:

Cracking good question from the Dorset West MP, Chris Loder, during PMQs today. Shame he tempered the impact by arris licking after the initial point.

 

If you didn’t see it live, you can watch it at 16min 30secs into the following...

 

 

Yes - interesting.

 

I'm also hearing noises about a reform of the electricity market, which is also being contemplated by the European Commission for those countries whose markets they control.

https://www.politico.eu/article/eu-weigh-option-power-market-reform-bloc-race-gas-storage/

 

A question here from Sir Peter Bottomley trying to get the Planning Inspectorate castrated in favour of Nimbies is interesting:

 

F

[Ferdinand]

1 hour ago, Gus Potter said:

But they are a nuclear armed state. The guy probably has not much less to loose personally.

 

Yes the risk is small that this will escalate into the use of tactical nuclear weapons or an intentional realease of nuclear material into the atmosphere from one of Ukraine's reactors.. but it is not a hypothetical risk.. it is plausable.. would you gamble on 1:500 odds (year return period) .. say the same as dam failing over a small UK city? The consequences are severe.

His desired legacy is to recreate the territory of the USSR as a new Russian Empire (or Imperial Space if you prefer).

 

His potential loss if he goes nuclear is Mother Russia, and especially the Western End of it, as a scorched, radioactive wasteland. I doubt he will do that, or others will let him do it.

 

Personally I think the question is basically moot. There is no alternative other than fully to support Ukraine. Not supporting Ukraine is an invitation to Putin or his replacement to attempt to repeat the performance for Moldova, Baltic states, Scandinavia, Poland. Surely we have learnt that lesson after the previous performances in Chechnya and Georgia, and now Ukraine?

 

If it doesn't stop, the alternative is that it will continue. The risk of escalation is a risk we do not have the alternative of not taking. It is a risk that has to be managed, as we will not get a better opportunity to stop Putin's create-more-failed-states games.

 

If he knows he is not going to be stopped having sent his army to rape, and abuse, and destroy, and murder their way across Ukraine, and is allowed to get away with something, then why on earth *would* he stop? His worldview is the Stalinist one that human lives and peoples can be thrown away, destroyed or moved, as he wishes, for his convenience.

 

Do we want to keep a prosperous, stable Europe? If we don't defend it, we will lose it. And do we want to support the development of democratic, free countries in the eastern half of Europe? We could lose that too. The long game is that Russia (or dis-integrated Russia) will become one of those free, democratic states.

 

As an aside, I think that countries like Poland (which may become the leading land military in Europe) and the Scandi / Baltic State bloc, and in due course Ukraine, are working to put themselves in strong enough positions that Russia won't dare touch them for a century such is the bloody nose it would get. So perhaps any long term decision to compromise with Russia was already impossible anyway.
 

For our comfort, Putin has been making these threats since the start, repeat and repeat and repeat. And done nothing. I suspect that he has been warned that if he goes nuclear NATO will intervene full bore, and he has zero chance in such a conflict.

 

Ferdinand

 

* I think one provocative though cynical question that I have heard asked is whether the USA is trying to 'help Ukraine win', or 'prevent Ukraine from losing' (as a way of weakening one of their two key global opponents). It's difficult to distinguish that from managing the potential for escalation that you wrote about. I don't think any other Western country thinks in those terms now on that scale, except maybe those that were rearming Russia before they woke up **, but the USA still deals in global level strategies. 

 

** I don't want that distinction to be quite that clear - I think that the whole of the West (except countries bordering Russia such as Finland) was asleep for far too long, but some more than others.

 

 

 

[ToughButterCup]

R4 Today talking about using Diesel generators for power generation.  

 

What price does the KwH have to be in order for us make it worth our while to use a Diesel genny?

 

@SteamyTea ?

[joe90]

6 hours ago, Ferdinand said:

I think one provocative though cynical question that I have heard asked is whether the USA is trying to 'help Ukraine win', or 'prevent Ukraine from losing'

I think that’s one and the same, most western free nations are trying to help another free nation from aggression and invasion, despite Putin alleging aggression from the west financially it’s simply non military support. The Ukrainians voted to be free of the old USSR. 

[SteamyTea]

20 minutes ago, ToughButterCup said:

KwH

Kelvin x angular rotation x Henrys

 

No idea

[ProDave]

29 minutes ago, ToughButterCup said:

R4 Today talking about using Diesel generators for power generation.  

 

What price does the KwH have to be in order for us make it worth our while to use a Diesel genny?

 

@SteamyTea ?

Funny, I was looking at a job yesterday to install a Mains / Generator changeover switch ready for when his 10KVA diesel genny arrives and he gets his tank of red diesel delivered.  This is one customer who thinks it will be cheaper.  I will watch with interest how it goes.