Cheaper Electric

[Yuff]

[AE-NMidlands]

He definitely knows what he is talking about... and it's a good point that the current players in an industry will have a lot invested and won't want it to change while they can milk it.
The regional pricing thing is a bit of a distraction though, as we ought to decouple the price of electricity from the gas/oil price. I don't know that the two changes have to be linked.

Incidentally, if oil is priced in dollars and the price has fallen with Trump's recession looming, plus the dollar has slid, shouldn't gas/electricity be much cheaper at the moment? Maybe we are just going to see more massive profits and windfall taxes for the treasury? Which ultimately/indirectly will have come out of our pockets, of course...

[Ken]

That is one side of the argument and it is a pity that he does not mention the opposing argument which also makes some valid points.

His main argument that cheap Scottish wind, sometimes curtailed can be sent down south is incorrect. The transmission capacity to do this does not exist hence the curtailment.

The idea it is all the fault of curtailment is debatable as last yr it accounted for less than 2% of costs.

That somehow it is wrong that we should be exporting to Europe is wrong because we very rarely do it and only when we have excess leccy because of strong wind. This will increase as we generate more RE but in the meantime we are net importing by a large margin.

The boffins in NESO and Gov are well aware of these issues.

When we do have RE dictating the price indeed the price can become very low or even negative as it often is in Europe also. Such low prices are unsustainable for long periods and this is balanced by the good times. Storage is just saving on the cost and pollution of building more power stations etc as storage produces nothing but then again it has a cost.

The argument is much more complex than simple media fliers.

[Ken]

He definitely knows what he is talking about... and it's a good point that the current players in an industry will have a lot invested and won't want it to change while they can milk it.
The regional pricing thing is a bit of a distraction though, as we ought to decouple the price of electricity from the gas/oil price. I don't know that the two changes have to be linked.

Incidentally, if oil is priced in dollars and the price has fallen with Trump's recession looming, plus the dollar has slid, shouldn't gas/electricity be much cheaper at the moment? Maybe we are just going to see more massive profits and windfall taxes for the treasury? Which ultimately/indirectly will have come out of our pockets, of course...

Yes he will definetly know the subject but as CEO of Octupus he himself is incumbent and promoting an agenda best suited to the profitabilty of his Co.
To think he is interested in the cost of leccy to me and you would be naive in the extreme.

I agree about decoupling gas to leccy prices but it seems to be littered with unintended consequences. Shame on him that he chooses to mention a few countries that do follow the decoupling (Australia ?) and which are already at close to 100% clean/RE when the vast majority follow our present system.

The majority of gas and leccy prices are set many months in advance and part of years in advance. Temporary changes in exchange rates just mean different Cos gain and loose.

[dan_b]

There is definitely a lot more to energy pricing than a one solution fixes all.

One interesting issue at the moment is that all of the environmental levies/taxes/charges are applied to the electricity market - and yet gas isn’t subject to any of these. If we’re trying to electrify everything and decarbonise at the same time, those costs/taxes are on the wrong side of the equation now when renewables make up increasing proportions of the energy mix.

I didn’t realise other countries had zonal pricing though that was new to me.

Getting more consumers onto smart meters and variable tariffs will also help.

Wonder if/when the UK will move to 15min settlement time blocks as is going to happen in the EU.

[nowty]

............. Incidentally, if oil is priced in dollars and the price has fallen with Trump's recession looming, plus the dollar has slid, shouldn't gas/electricity be much cheaper at the moment? Maybe we are just going to see more massive profits and windfall taxes for the treasury? Which ultimately/indirectly will have come out of our pockets, of course...

Year ahead wholesale leccy price has fallen 30% from the last recent peak, but it has fallen AFTER the cut off from the last price cap review. We have about a month left to the next price cap cut off so expect about a 15% to 20% fall for the next period if wholesale prices continue to remain at current levels. The price cap is a 3 month average of the year ahead price for the past 3 months.

[John_S]

The majority of gas and leccy prices are set many months in advance and part of years in advance. Temporary changes in exchange rates just mean different Cos gain and loose.

Is this correct?

As I understand it, wind farms being subsidised with a contract for differences sell at spot prices because contracts for differences are priced at spot and selling at spot eliminates price risk.

Also if there were a lot of long term contracts, there would be less at spot, except for the balancing between too much or too little supply. Yet the claim is that gas spot prices everything.

[nowty]

Energy pricing is complicated, you might want to read or re-read my thread on wholesale energy pricing here from nearly 2 years ago,
https://camelot-forum.co.uk/phpBB3/view ... =14&t=2276

Specifically I did a post (in that thread) on decoupling the price of leccy from gas which is the issue of this thread,
https://camelot-forum.co.uk/phpBB3/view ... =10#p34123

There was supposed to be a decision on zonal pricing in the first quarter of this year but it did not happen as it might halt some of the planned renewable's north of the border.

We are still waiting on a decision from the government / OFGEM.

[AE-NMidlands]

A timely article on the topic:mhttps://www.theguardian.com/business/2025/apr/2 ... GTUK_email

Why the UK’s electricity costs are so high – and what can be done about it: From nationalising gas plants to boosting renewables, how soaring prices could be tackled

One of Labour’s key election promises was to cut energy bills by £300 a year by 2030 while making Britain a “clean energy superpower”.

The job is already halfway complete: renewable energy made up more than half the UK’s electricity for the first time last year. So why does Britain continue to have one of the most expensive electricity markets in the world? Industrial users complain those costs are driving companies out of business and discouraging investment in the UK.

The reason behind Britain’s sky-high wholesale energy costs is simple, according to experts. It is down to Britain’s reliance on gas – the price of which was sent soaring by Russia’s invasion of Ukraine – in power plants and home heating.

...

[Yuff]

A timely article on the topic:mhttps://www.theguardian.com/business/2025/apr/2 ... GTUK_email

Why the UK’s electricity costs are so high – and what can be done about it: From nationalising gas plants to boosting renewables, how soaring prices could be tackled

One of Labour’s key election promises was to cut energy bills by £300 a year by 2030 while making Britain a “clean energy superpower”.

The job is already halfway complete: renewable energy made up more than half the UK’s electricity for the first time last year. So why does Britain continue to have one of the most expensive electricity markets in the world? Industrial users complain those costs are driving companies out of business and discouraging investment in the UK.

The reason behind Britain’s sky-high wholesale energy costs is simple, according to experts. It is down to Britain’s reliance on gas – the price of which was sent soaring by Russia’s invasion of Ukraine – in power plants and home heating.

...

Or the fact they use the expensive gas price to set the electric price.
Too many people creaming off profits and not enough persuasion to change the existing set up which everyone knows is useless…..