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Energy bills to tick lower this winter but will remain high (www.bbc.co.uk)
submitted 1 year ago by [email protected] to c/[email protected]
32 comments fedilink hide all child comments
 

An annual energy bill for a typical household will fall to £1,923 in October under regulator Ofgem's new price cap.

I honestly think it's appalling that they're continuing to let these energy providers make obscene profits from us.

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[–] [email protected] 4 points 1 year ago

This is the best summary I could come up with:

Ofgem chief executive Jonathan Brearley said: "We know people are struggling with the wider cost of living challenges and I can't offer any certainty that things will ease this winter."

Asked about families being concerned they will again struggle to pay their bills this winter, he said the government was working "night and day to ensure the money in people's pockets goes further".

"Typical households are still facing sky-high energy costs, now that support schemes have come to an end," said Gillian Cooper, from Citizens Advice.

Jay Cross, who runs a barbers shop, said he and his wife Andrea found their direct debits were failing to cover their bills last year.

Here are some energy saving ideas from environmental scientist Angela Terry, who set up One Home, a social enterprise that shares green, money-saving tips:

If you are reading this page and can't see the form you will need to visit the mobile version of the BBC website to submit your question or comment or you can email us at [email protected].

The original article contains 1,068 words, the summary contains 171 words. Saved 84%. I'm a bot and I'm open source!

[–] [email protected] -4 points 1 year ago (2 children)

On the other hand. It's the only thing that's made people change their energy use habits.

People on the news with thermostats at 24 degrees c because they like to wear t-shirts all year... 🤦

[–] [email protected] 12 points 1 year ago (1 children)

Ah yes, shift the focus onto the individual rather than the profiteering polluting energy companies.

I'd rather have cheaper renewable energy, warmth and comfort, than wear hat, gloves, thermals multiple layers, and sit in a sleep bag in my own living room.

[–] [email protected] -4 points 1 year ago* (last edited 1 year ago) (1 children)

I didn't say that though.

I said the price increase changed behaviour. It's reduced fossil fuel usage. I only care about net results. If you're cold, go for a run. It'll help reduce stress on the NHS

Renewables are only economically viable because the cost of power is paid on the last generator, which is natural gas.

So higher gas prices make renewables a more efficient use of capital and justify the capex

You have a problem with that?

[–] [email protected] 5 points 1 year ago* (last edited 1 year ago) (1 children)

If you're cold, go for a run. It'll help reduce stress on the NHS

Not if you fall, or get hit by a car...

Renewables are only economically viable because the cost of power is paid on the last generator, which is natural gas.

This is not true, renewables are economically viable at much lower prices than fossil fuels because their next unit cost is effectively 0.

It is true the price paid to generate is the market rate, and that is set by the last generator. That does make renewables immensely profitable, which in turn acts as an incentive to build more.

But we are talking about electricity generation here, not heating which is what you were doing on about, and the vast majority of heating in the UK is non-electric and transitioning to renewable sources is extremely expensive.

That said, using less gas in electric generation would reduce supply shocks in the gas heating network.

Edit: next unit cost, not just unit cost.

[–] [email protected] -1 points 1 year ago* (last edited 1 year ago) (1 children)

Their unit cost is zero?

Capex is huge, and there will always be opex for people, repairs and maintenance. The blades and motors etc all have to be replaced regularly.

Solar output is also much less during winter

My new boiler can run a hydrogen mix and all the UK metal pipes are being replaced with plastic inserts so at some point green hydrogen could offset natural gas and that itself could be replaced eventually with syngas from biofuels.

[–] [email protected] 4 points 1 year ago* (last edited 1 year ago) (1 children)

Their unit cost is zero?

Apologies, I meant to say Next Unit Cost, didn't spot the missing word. As in the cost to produce one more unit of electricity. This measure ignores capex and is just opex plus associated usage costs like amortised wear and tear, depreciation, etc.

It's near 0, but not 0, because the input (wind, sun) is free, whereas gas (for CCGT) is not. As such renewables can sell in to the grid, profitably, at lower prices than fossil fuels can.

The big problem, as you show with the example of cloudy winter days, is disconnecting generation from usage, via storage.

Green gas from anorobic respiration, including hydrogen (or just blue hydrogen, made via electrolysis of sea water) is a useful step for retrofitting, but not something - in my opinion - that should be considered for new builds.

[–] [email protected] -1 points 1 year ago (1 children)

Ah, yes. But we can't actually ignore capex, because most of the fossil fuel infrastructure is sunk cost.

Renewables are net new capex, which needs a return. The reduction in cost of renewables is the best thing. A barrel of oil isn't going to get any cheaper to pump out but wind and solar will. The war is already won, we just haven't seen the benefits yet.

I think green hydrogen would help smooth the peaks of renewables but it's not very efficient, probably a better use is making ammonium nitrate for fertiliser or as a replacement for heavy oil for shipping

[–] [email protected] 2 points 1 year ago (1 children)

Context of the situation is important. You can't use them interchangeably.

Capex does not matter when we are talking about choosing to generate using existing infrastructure, because capex amortisation is the same regardless of whether you're generating or not. Choosing whether to generate at 1am on a random Tuesday has nothing to do with your previous capex, but everything to do with your next unit cost. If price is higher than cost, you'll generate, it not you (probably) won't.

Capex payback is important when businesses are evaluating building new generation. The spot price at 1am on a random Tuesday has nothing to do with whether you're choosing to build new infrastructure. What does matter is average unit prices, over time, not one data point.

[–] [email protected] -1 points 1 year ago (1 children)

But you said you wanted more renewables... That's capex.

[–] [email protected] 3 points 1 year ago (1 children)

I'm not the person you originally replied to when you falsely claimed that renewables are only economically viable because of last generator pricing.

I have explained why that isn't the case, how both generation and new capacity decisions are made, the different aspects those decisions consider, and how because their next unit cost is lower due to generation input being free they are able to operate profitability at lower spot prices than are achievable for fossil fuels.

One last time - capex payback is a consideration when building new capacity, yes, but that is based on average prices over decades. It is not a consideration when choosing whether to power up or down on at a specific time on a specific day.

Attempting to simplify this to just capex is wrong.

[–] [email protected] -2 points 1 year ago* (last edited 1 year ago) (1 children)

Economically viable means you can raise the capital to build it...higher returns attract more capital

https://www.designingbuildings.co.uk/wiki/Economic_viability

Spain has cut the last generator link so now renewables are not charged at the gas rate.

Let's see how it works out. It's already helped reduce inflation there.

[–] [email protected] 2 points 1 year ago (1 children)
  • Why are you linking to a definition of economic viability for buildings? The main cost of traditional fossil fuel based electricity generation is the fuel source, over lifetime, not initial construction
  • Higher returns due to high average costs certainty attract investment - I said as much in my first comment
  • I agree with disconnecting prices from last generator, and that it will reduce inflation, because it would reduce the average price, all else being equal
  • A lower average price would extend payback periods which may discourage investment when compared to the current pricing model, again all else being equal. This is a difficult comparison because it would presume an ability to choose between the two payment methods, which you can't.
  • We are still talking about average prices, over time, which again is different to spot prices, and both above points are further proof that your original statement of renewables being economically inviable is incorrect.
[–] [email protected] 1 points 1 year ago* (last edited 1 year ago) (1 children)

Because capex is capex. Buildings, solar, windmills. Doesn't matter. All that matters is capex roi and opex unit per watt

We are still talking about average prices, over time, which again is different to spot prices, and both above points are further proof that your original statement of renewables being economically inviable is incorrect.

Now go read this and tell me that capex doesn't matter

https://www.bbc.com/news/uk-england-norfolk-66263340

[–] [email protected] 1 points 1 year ago (1 children)

I'm done here, you're clearly not reading what I've said if you genuinely believe I've said capex never matters.

[–] [email protected] 1 points 1 year ago (2 children)

I said - Renewables are only economically viable because the cost of power is paid on the last generator, which is natural gas.

You said - This is not true, renewables are economically viable at much lower prices than fossil fuels because their next unit cost is effectively zero

And yet I show you sources where increased capex costs are making renewables economically unviable because the capex costs have increased so much due to inflation and the wholesale price they were offered at auction is now not enough to justify the CAPEX to build it.

You're going in circles because you won't admit that the horse comes before the cart. You can't get to zero extra unit cost if you don't build the fucking thing.

[–] [email protected] 1 points 1 year ago (2 children)

I explicitly covered this in my 3rd comment - quoted below.

Capex payback is important when businesses are evaluating building new generation. The spot price at 1am on a random Tuesday has nothing to do with whether you're choosing to build new infrastructure. What does matter is average unit prices, over time, not one data point.

[–] [email protected] 1 points 1 year ago* (last edited 1 year ago) (1 children)

And yet you're still wrong.... The prices are part of the contract.

The increased capex and opex is making it economically unviable

https://www.rigzone.com/news/wire/14gw_wind_project_in_uk_cancelled_as_costs_soared-20-jul-2023-173391-article/

[–] [email protected] 1 points 1 year ago* (last edited 1 year ago) (1 children)

My good fellow, if you believe that cap and floor contracts somehow disproves my point, then you really do need to go back and re-read what I've been saying all along, not just what you think I've been saying.

For the final, final time:

  • Both types of generation have the same capex payback considerations, which will be spread over the expected lifetime of the project.
  • To be crystal clear, I am not saying the literal cost is identical, obviously the actual Pounds and Pence cost of 1 small onshore windmill is different to 1 massive offshore windmill or 1 CCGT.
  • Capex costs do not change day to day due to whether you are generating or not because they are, by definition, unrelated to operation.
  • Prices fluctuate throughout the day, and may go up or down between when you start generating and when you stop.
  • The input 'fuel' used by solar, wind, and tidal to generate is free, which significantly reduces their Next Unit Cost compared to fossil fuels or storage, which is the key Opex cost when considering whether to generate at a specific time on a specific day.
  • Your ability to generate also changes. If you run a solar park and the price is sky high, but it's 10pm in December, tough.
  • If the gas you're burning, or the stored power you're realising (batteries, pumped hydro) cost more than the current price you'd be paid, then it is extremely unlikely that you're going to do it.
  • Cap and Floor contracts, which specify a maximum and minimum price you can be paid, merely put limits on how much money you can make on each unit sold
  • This means that, all else being equal, renewables are able to operate profitability at lower market prices compared to fossil fuels
  • As all else is not equal, the viability of a project is based on the projected difference between average costs, including capex payback, and average price.
  • These factors must be considered regardless of means of generation - the price of each factor will again obviously be different
  • The difference between average cost and average price is your profit margin / return on investment
  • The higher the floor relative to projected market price, the easier it is to operate profitability
  • The lower the cap, the harder it is
  • The closer your projected unit price and projected costs are, the less profit you'll get and the less viable the project is

Again:

  • the choice to generate on a specific Tuesday at 1am is based on the price you'll be paid, versus Opex, on that day
  • the choice to build the generator in the first place is based on the projected profit from lifetime costs versus lifetime earnings

I will only reply if your next comment actually brings something new to the conversation.

[–] [email protected] 0 points 1 year ago* (last edited 1 year ago)

You're talking about existing infrastructure, I'm talking about net new capex, so we're talking at cross purposes and it's dull

Cya

[–] [email protected] 1 points 1 year ago (1 children)

@hellothere
Definitely for baseload generators. Perhaps slightly different for peaking generators etc. Average for the sort of units you propose to sell, I guess.

[–] [email protected] 1 points 1 year ago

This is a fair point - peaking is more complex, especially if we're considering batteries where their generation cost is going to include probabilistic opportunity costs - ie how confident are they that the price won't fall further and/or if this is the peak of the spot and best time to sell.

But yes, over the decades you'd be looking to run to utility for, you're looking at blended averages to calculate the return.

[–] [email protected] 0 points 1 year ago (1 children)

@bernieecclestoned @hellothere
Renewables are viable because they produce electricity cheaper than combustion, and because combustion will be restricted and banned in various conditions as time goes on.

We used to think peak oil would be more of a problem, but previous oil is the compelling problem.

[–] [email protected] 1 points 1 year ago* (last edited 1 year ago) (1 children)

@hellothere](https://sh.itjust.works/u/hellothere)

For the UK, onshore is not viable due to planning and solar is less so during winter when energy demand is highest.

It's a small island surrounded by sea, offshore wind is the only game in town, other than nuclear, and currently offshore is not viable unless the govt ups the contracted MW hour rates...

[–] [email protected] 0 points 1 year ago (1 children)

@bernieecclestoned
Planning needs changing.
(I like wind turbines on hills. Pretty.)

Thing about solar is you keep putting up more panels, and by and by you halve as much power in the winter as you used to in the summer.

Solve the society for the prevention of rural electricity, soon.

[–] [email protected] 1 points 1 year ago

I don't think panels are the answer, solar leaves that create fresh water as well as pv and thermal giving >70% efficiency sounds great

https://www.imperial.ac.uk/news/246833/bio-inspired-solar-leaf-design-with-increased/

The storage requirements are going to be huge, we'd need something like this for every town, goes inside the hill, no nimbyism.

https://www.theengineer.co.uk/content/in-depth/uk-firm-promises-high-density-pumped-hydro-revolution/

[–] [email protected] 2 points 1 year ago (1 children)

People were just not putting their heating on in the winter. It's unhealthy at best, dangerous at worst and allows your home to get damp. I was honestly miserable last winter without heating.

[–] [email protected] 2 points 1 year ago (1 children)

You can thank the Tories for that. Other countries imposed a cost cap. UK, Netherlands and I think Belgium didn't and used benefits to offset with differing levels of effectiveness.

[–] [email protected] 2 points 1 year ago (1 children)

Yes, we have the highest energy bills in the world due to our government and it has put people into fuel poverty. Saying it's purely stopping people from sitting at home in 24°C heat is naive.

[–] [email protected] 2 points 1 year ago* (last edited 1 year ago) (1 children)

Net highest? Got a source for that?

I didn't say it's purely doing that. I merely stated that the only thing that has made people change their behaviour during a climate crisis is the price of energy going up.

[–] [email protected] 1 points 1 year ago (1 children)

https://www.cityam.com/revealed-brits-are-paying-the-highest-electricity-bills-in-the-entire-world/

Yeah and people would lose weight if we had famine. It's hardly a silver lining.

[–] [email protected] 2 points 1 year ago

I said net. Like I said, they let the energy shock into the economy and paid benefits

Here's the size of it. UK's was one of the largest 2 years running

Here's a comparison by the OBR

https://obr.uk/box/an-international-comparison-of-the-cost-of-energy-support-packages/