Are we targeting ASHP's at the wrong market?

[JamesPa]

31 minutes ago, Beelbeebub said:

I assume the renewable profits. 

 

The upfront cost of renewable capacity has historically been more than fossil fuels per. MW

 

I believe it is currently around $1-2m per Mw for wind. 

 

Solar in the UK is about the same (the land costs are higher, if we had lots of desert it would be cheaper) 

 

CCGT is around (or just below) $1m per. Mw

 

But the running costs of renewables are pretty low and immune to world markets for gas etc. 

 

 

 

 

Difficult one then.  Investment needs incentives and so we have to expect some profit to go to those investing.  The question is whether it's excessive or not.  I don't have the facts.

[SteamyTea]

5 minutes ago, JamesPa said:

Investment needs incentives

More than that it likes stability and some certainty in the markets.

Something that all governments (UK) in the last 15 years have failed to deliver.

[Beelbeebub]

From.... https://www.instituteforgovernment.org.uk/article/explainer/electricity-market

 

It may seem odd that electricity produced with low-cost renewables should cost suppliers (and thus consumers) the same high price as electricity generated by gas-fired power stations. But this is a common feature of competitive auction markets of any kind.

 

The wholesale electricity market could instead be run using a ‘pay as bid’ auction model. In this type of auction, electricity generators would put in bids and be paid the price they bid, rather than the bid of the highest-priced supplier. If low-cost generators submitted bids at their marginal cost, this would lower the average cost in the wholesale market, feeding through to lower prices in the retail market.

 

But there would be no incentive for low-cost generators to bid at their true marginal cost. Instead, they would bid at the price at which they expected the market to clear. If renewable electricity generators were aware that demand was high enough for gas-fired power stations to be required, then they would know they would be able to sell their energy at (or just below) the marginal cost of gas-fired power stations. To prevent this sort of strategic bidding, additional controls on the market would be necessary.

 

Without radically altering the wholesale electricity market, it is difficult to break the link between marginal electricity generation costs (typically from gas) and the prices that consumers pay. But as part of its recently announced review of electricity market arrangements (REMA),[1] the government is considering making the sort of fundamental changes that could break the link. Some options being considered include:

 

*    moving to the ‘pay as bid’ auction model – but without additional controls imposed by government this may not lead to particularly large changes in electricity prices

*    splitting the electricity markets into separate markets for variable power (for example wind and solar) and constant power (such as nuclear) – a more radical option.[2]

 *   the creation of a ‘green power pool’, a government-backed entity that would offer long-term contracts to all low-carbon generators and sell directly to consumers, using exclusive access to cheap green power to deliver lower prices[3]

 

[Beelbeebub]

Maybe thr go should buy up renewable power generators and sell the energy to the wholesale market at cost. The final price wouod then be the average of the energy bought via the current wholesale market and the energy provided by the national renewable generator.  The cost of operating the renewable would thus be made visible in the auction and there would be incentive for investment (as now) but the total "extra profit" would be lower as thr national generator would be fulfilling some of the demand. 

 

Providing energy at competitive rates would be a major economic boon to the UK. 

[Mike]

16 minutes ago, Beelbeebub said:

Without radically altering the wholesale electricity markek

I've not taken an interest, so don't know how radical the proposals are, but the Government has been consulting on energy market reforms:

 

https://www.gov.uk/government/collections/review-of-electricity-market-arrangements-rema

 

[JamesPa]

38 minutes ago, Beelbeebub said:

*    splitting the electricity markets into separate markets for variable power (for example wind and solar) and constant power (such as nuclear) – a more radical option.[2]

As  a variant of this option -  Buy the baseload at one price (guaranteed contract, you pay even if you dont consume and supplier pays the difference if they cant supply) and the variable load at another price.

 

 

Re "Providing energy at competitive rates would be a major economic boon to the UK. "

 

My crude understanding is that our model for computing electricity prices (and in particular the fact that its based on the marginal price, ie the price for electricity generated from gas) is driven by the EU.  This begs the question - how did we end up with more or less the worst ratio of gas to electricity prices in the EU.  Was the previous government (or the government before that) asleep at the wheel?

 

Edited Thursday at 20:40 by JamesPa

[Mike]

38 minutes ago, JamesPa said:

the price for electricity generated from gas) is driven by the EU

The price of gas is driven by international demand, which is high due to the removal of piped Russian gas from the market. The UK is much more reliant of gas than many other European countries for electricity generation, and is also more exposed to short-term gas price fluctuations as it has very little gas storage capacity. Consequently UK electricity is significantly more expensive.

[Roger440]

6 hours ago, Beelbeebub said:

Dont think. Anyone is suggesting doubling gas prices, at least not deliberately. They are double what they were 5 years ago just because (gestures at world.events)

 

The ratio of gas to electric is the issue and right now it is too high because of a number of policy decisions. 

 

Loadig green levies onto electricity and not gas is a choice. We should remove them from electric. Whether or not to stick them on gas is aost a separate question (the cost could come from the general taxation pool). Keeping the structure where the wholesale electric price is set by the most expensive generator (gas) is also a choice. 

 

If electricity were only 2, 2.5x gas prices then HP adoption would drive itself. 

 

 

I think you will find they did! 

 

Then you suggest the same, but tempered with the idea that it comes from the general taxation pool. Because there loads of spare cash there!

 

Regardless of if its on gas directly, or on tax generally, its an additional tax on people to deliberately make them poorer. Ill never support that.

 

The real issue, as discussed, is the price of electricity is way to much. Fix that, and you are a big step along the way. And we all know that can be done tommorow. Putting UP gas just lines the pockets of MCS union members and other leeches at the detriment of everyone else. Its just a dumb solution, nor likely to happpen.

 

The fact that electricity prices remain pegged tells you all you need to know about whats really at play..

 

 

[Roger440]

1 hour ago, Mike said:

I've not taken an interest, so don't know how radical the proposals are, but the Government has been consulting on energy market reforms:

 

https://www.gov.uk/government/collections/review-of-electricity-market-arrangements-rema

 

 

Of course it has. It wont change in any meaningful way. Consulting is an excellent way of doing nothing.

[Roger440]

1 hour ago, Beelbeebub said:

Maybe thr go should buy up renewable power generators and sell the energy to the wholesale market at cost. The final price wouod then be the average of the energy bought via the current wholesale market and the energy provided by the national renewable generator.  The cost of operating the renewable would thus be made visible in the auction and there would be incentive for investment (as now) but the total "extra profit" would be lower as thr national generator would be fulfilling some of the demand. 

 

Providing energy at competitive rates would be a major economic boon to the UK. 

 

Whilst your last sentence is indeed very true, and an important point that seems lost on most, but the idea of nationalised renewable is nearly as daft as councils building houses. Within a few years most would be non functional.

 

And where will the money come from to buy them all? 

 

Sorry, this is just bonkers.

[Roger440]

1 hour ago, JamesPa said:

As  a variant of this option -  Buy the baseload at one price (guaranteed contract, you pay even if you dont consume and supplier pays the difference if they cant supply) and the variable load at another price.

 

 

Re "Providing energy at competitive rates would be a major economic boon to the UK. "

 

My crude understanding is that our model for computing electricity prices (and in particular the fact that its based on the marginal price, ie the price for electricity generated from gas) is driven by the EU.  This begs the question - how did we end up with more or less the worst ratio of gas to electricity prices in the EU.  Was the previous government (or the government before that) asleep at the wheel?

 

 

1 word, "chums".

[Beelbeebub]

1 hour ago, Roger440 said:

I think you will find they did! 

 

Then you suggest the same, but tempered with the idea that it comes from the general... 

The closest I've come is my suggestion the green levies on elec (about 2p) are switched to gas moving the price from around 5p to 7p and elec from around 24 to 22p (ratio 4:1 to 3:1) hardly doubling. 

 

The effect on fuel poverty being the principle reason against the idea (though it would help those on elec only heating who are disproportionate representated in the fuel poverty ranks) . The alternative is to simply remove the levy from elec to general taxation which would halve the ratio improvement. 

 

Again if you are worried about fuel poverty switching people to efficient HPs will save them money - in the case of those on gas, a little (at current ratio). In the case of elec users a massive amount. 

[Beelbeebub]

1 hour ago, Roger440 said:

 

Whilst your last sentence is indeed very true, and an important point that seems lost on most, but the idea of nationalised renewable is nearly as daft as councils building houses. Within a few years most would be non functional.

 

And where will the money come from to buy them all? 

 

Sorry, this is just bonkers.

Why would they be non functional? The people "on the ground" would be the same as now. The only difference would be the profit generated would be fed back. If you wanted it could operate exactly the same as the other generators and the profits generated used to reduce the price to the consumer instead of ending up as dividends and bonuses. 

 

As for money. - where does the money to build them come from now? Investors, who expect interest in return. Except the rates of interest charged to commercial companies are higher than that charged to governments thus the prices charged have to be higher to include the payback. 

 

And the UK would be building long term infrastructure. Dinorwig was government built (the old cegb) and it's still trundling along 40y on providing vital load balancing capacity and will probably carry on for another 40.

 

How many times over has the hoover dam paid for itself?

 

Whenever you build infrastructure it always looks expensive until you look back later and it seems cheap. 

 

 

[MikeSharp01]

19 hours ago, JamesPa said:

flexibility for people to make informed trade offs.

Informed by what / whom. Of that 1.4m how many will want to learn enough to inform themselves. They will rely on their installers. 

[Roger440]

2 hours ago, MikeSharp01 said:

Informed by what / whom. Of that 1.4m how many will want to learn enough to inform themselves. They will rely on their installers. 

About 3. 

 

 

[Roger440]

8 hours ago, Beelbeebub said:

Why would they be non functional? The people "on the ground" would be the same as now. The only difference would be the profit generated would be fed back. If you wanted it could operate exactly the same as the other generators and the profits generated used to reduce the price to the consumer instead of ending up as dividends and bonuses. 

 

As for money. - where does the money to build them come from now? Investors, who expect interest in return. Except the rates of interest charged to commercial companies are higher than that charged to governments thus the prices charged have to be higher to include the payback. 

 

And the UK would be building long term infrastructure. Dinorwig was government built (the old cegb) and it's still trundling along 40y on providing vital load balancing capacity and will probably carry on for another 40.

 

How many times over has the hoover dam paid for itself?

 

 

Whenever you build infrastructure it always looks expensive until you look back later and it seems cheap. 

 

 

 

Because modern government simply cant run anything.

 

Im not disagreeing with your logic, im of the view that energy should be a state function, but using an example of 40 years ago isnt helpful. We had organisations and institutions capable of delivering such things. (ive said this before). That all gone. Government has no resources, and definitely no ability or competence to build anything at all. Never mind run and maintain it. We are incapable of maintaining anything. Network Rail would be a good example. Fully state owned.

 

Eds self written document makes it clear that huge government sums ((i forget the amount, but it will be way off reality anyway) will be required to create that infrastrucure, even though it will be private enterprise building it. I still say, where will the money come from?

 

We are more likely to go for an IMF bailout than we are to fund a new power distribution.

[Roger440]

9 hours ago, Beelbeebub said:

The closest I've come is my suggestion the green levies on elec (about 2p) are switched to gas moving the price from around 5p to 7p and elec from around 24 to 22p (ratio 4:1 to 3:1) hardly doubling. 

 

The effect on fuel poverty being the principle reason against the idea (though it would help those on elec only heating who are disproportionate representated in the fuel poverty ranks) . The alternative is to simply remove the levy from elec to general taxation which would halve the ratio improvement. 

 

Again if you are worried about fuel poverty switching people to efficient HPs will save them money - in the case of those on gas, a little (at current ratio). In the case of elec users a massive amount. 

 

Double, no, but you are still proposing to artificially, and deliberately make people worse off, to give the money to the leeches!

 

You appear to miss the key point however, that a big chunk of those affected cannot fund a heat pump installation, be they on gas, oil or electric. The capital cost precludes it for most. Doesnt matter if there is a long term saving. Not everyone is wealthy Buildhubber.

 

The price could be 1:1, and it STILL would have limited effect.

 

If you start looking at paybacks, its just a long time. Even for me, i can afford to improve my house insulation etc. But payback is long after my death. So why would i do that? Even replacing my old double glazing with decent triple and im at 40 years plus.

 

Unless you "give" people their heating system upgrade, its not going to happen. I suspect this is where we will end up. The leeches will be rubbing their hands.

[Beelbeebub]

6 hours ago, Roger440 said:

Because modern government simply cant run anything

I would contest that. 

 

There has been, over the last few decades a deliberate (and to some extent self fulfilling) narrative that government is incompetent and only private enterprise can get things done. 

 

Governments can and have carried out big complex projects. Quite often the foundations of private success stories are from government beginnings - the whole bloody Internet and world wide Web upon which many of today's billionaires built their fortunes was a series of public projects. 

 

Where thing often come unstuck is when government mixes with private. 

 

There are some things that should be private. Shoes, clothes, TVs, your kitchen etc. Things where the market is the best mechanism and governments role is as regulator (eg food standards, consumer rights, employment law etc) 

 

There are other things where the public model is better. Generally large natural monoploies with high infrastructure costs. Water supply, transport infrastructure, aire traffic control etc. I would say energy supply and distribution is one of those areas. 

 

When you try and mix those areas and shoe horn some sort of market system into something that it doesn't fit you get a bloody mess. Is anyone here going to argue that the privatisation of water and rail has been a success? How about the post office?

 

So what else was privatised in that rush?.... Oh look, energy.... Is that the one shining example of success? 

[Beelbeebub]

6 hours ago, Roger440 said:

 

Double, no, but you are still proposing to artificially, and deliberately make people worse off, to give the money to the leeches!

 

You appear to miss the key point however, that a big chunk of those affected cannot fund a heat pump installation, be they on gas, oil or electric. The capital cost precludes it for most. Doesnt matter if there is a long term saving. Not everyone is wealthy Buildhubber.

 

The price could be 1:1, and it STILL would have limited effect.

 

If you start looking at paybacks, its just a long time. Even for me, i can afford to improve my house insulation etc. But payback is long after my death. So why would i do that? Even replacing my old double glazing with decent triple and im at 40 years plus.

 

Unless you "give" people their heating system upgrade, its not going to happen. I suspect this is where we will end up. The leeches will be rubbing their hands.

But domestic gas is also kept artificially cheap. 

 

First you have all the subsidies for fossil fuel companies. 

 

Then gas used for generation (which then sets all the electricity unit prices) is carbon taxed, but gas for homes is not. 

 

You are right that raising any energy prove will hit the poorest most and thwt should be avoided as much as possible. 

 

But that doesn't mean we should do nothing 

 

And yes, that might extend to paying for people to have their heating system upgraded so it costs them less to run. 

 

As I pointed out before, switching any direct electric house to an a2a system will cut the bills by 2/3. If the house is on e7 then your cost drop would be less but still a saving *and* you wouldn't have the crappy storage heaters going cold in the evening forcing them to use extra expensive portable heaters. Right now, new "HHR" heaters that wouod help. Are about £700-1000 each. So 4 (the likely minimum in a property) is £2-3k. Then you have labour to fit, and if the place is up stairs..... That's gonna cost as you hump the better part of half a ton up and down! Couple that with the wiring needing upgrading in some cases (dual supply) and you coukd easily be knocking on £4-6k to end uk back where you started. Or you could fit an a2a muktisplit for bit much more. 

[SteamyTea]

32 minutes ago, Beelbeebub said:

crappy storage heaters going cold in the evening forcing them to use extra expensive portable heaters.

That is more down to education than design, though I suspect that some places do have undersized storage heaters.

My totally dumb, 1987 vintage, storage heaters work fine.  Took about 10 minuted to work out that there are two dials (and a thermo-electric flap) that control them.

If people are turning on supplementary heating (apart from weather extremes), then they need telling how a storage heater works.

But I do agree, that retrofitting A2AHPs in those dwellings would be a good move.

[Beelbeebub]

7 minutes ago, SteamyTea said:

That is more down to education than design, though I suspect that some places do have undersized storage heaters.

My totally dumb, 1987 vintage, storage heaters work fine.  Took about 10 minuted to work out that there are two dials (and a thermo-electric flap) that control them.

If people are turning on supplementary heating (apart from weather extremes), then they need telling how a storage heater works.

But I do agree, that retrofitting A2AHPs in those dwellings would be a good move.

We've got 5 or 6 flats on those type. The main issue is they leak heat too much. Quite alot comes out when the occupant is out.  From a maintance perspective it's great as the tenant can't turn the heating off during the day and let the flat cool too much (big cause of damp issues). 

 

But then they do seem to run out of puff at the end of the day, especially at the moment with cold evenings. 

 

But nobody is happy with them. 

 

We tried some of the new "smart" ones but they were a nightmare from a user perspective. Not easily controllable. 

 

Am toying with swapping to a 3 way multiple split. Quote was around £5k although it will probably have gone up by now. Main stumbling block is the planning/paperwork involved as we re in a conservation area. 

Edited 13 hours ago by Beelbeebub

[SteamyTea]

1 hour ago, Beelbeebub said:

Main stumbling block is the planning/paperwork involved as we re in a conservation area

Try being in a World Heritage Area. Not even allowed to replace my garden shed without permission.

[Beelbeebub]

2 minutes ago, SteamyTea said:

Try being in a World Heritage Area. Not even allowed to replace my garden shed without permission.

Exactly. Listed stuff is also in the same boat, despite often sporting additions and modifications from various time periods. It seems we must now do no more! 

 

At some point we.nees to decide what is more important - victorian sash windows with 3mm glass or being warm and draft proof? 

 

I would argue the former is of value to people who don't live or own the property whilst the latter is more important to the occupants. 

[SteamyTea]

3 minutes ago, Beelbeebub said:

 

At some point we.nees to decide what is more important - victorian sash windows with 3mm glass or being warm and draft proof

Don't forget climate change.

[Beelbeebub]

1 hour ago, SteamyTea said:

Don't forget climate change.

Hopefully the 2nd point helps with that. 

 

Well it will if we move to hearing our homes in an efficient and low carbon manner. 

 

If we just cut the price of gas to "help the poor", it won't. 

Edited 10 hours ago by Beelbeebub