SSE raises energy prices 8.2% just before winter....again.

michaels

CLAPTON wrote: »

one might reasonably conclude the energy companies don't invest in gas storage because they don't make sufficient profit from it.

no politics, just profit and loss a/c

And the reson why there is not enough profit? Perhaps it is fear that the govt will intervene if prices go crazy? In a totally free market prices may spike crazily in winter (windless cold snap, Russia supply issues, France using all their leccy with a couple of nuke stations offline) and people who can afford it will pay a lot more and those who can't will sit in the cold/dark. Companies will see this opportunity and invest appropriately. However companies know that the govt would never let prices adjust in such a way and thus there is no incentive to invest in the highly risky potentially highly profitable marginal capacity as those windfall gains will be prevented by legislation.

IE a free market would provide but in a socially unacceptable manner, a market with govt intervention wil be more socially aceptable but is unlikely to produce sufficent investment henc efurther govt intervention is required to guarante investment and pretty soon the market is so 'mixed' that it is unclear whether a partial market/partial regulated environment is actually more efficient that a tightly controlled state provider....

chucky

CLAPTON wrote: »

one might reasonably conclude the energy companies don't invest in gas storage because they don't make sufficient profit from it.

no politics, just profit and loss a/c

You're probably right, but they should say that instead of blaming the government for not investing enough. Right there is the political game they are all playing.

CLAPTON

chucky wrote: »

You're probably right, but they should say that instead of blaming the government for not investing enough. Right there is the political game they are all playing.

It would be slightly odd for a PLC to publicly feel the need declare they don't plan to invest in a loss making project especially when the government declares we don't have a problem with security of supply.

Thrugelmir

CLAPTON wrote: »

one might reasonably conclude the energy companies don't invest in gas storage because they don't make sufficient profit from it.

no politics, just profit and loss a/c

In France majority of the gas is compressed and stored underground in natural chambers. So facilities aren't built. Requires the geology of the ground to be right. No doubt this has been investigated in the past and not found to be possible in the UK.

Kennyboy66

Thrugelmir wrote: »

In France majority of the gas is compressed and stored underground in natural chambers. So facilities aren't built. Requires the geology of the ground to be right. No doubt this has been investigated in the past and not found to be possible in the UK.

There are several UK locations where this can be done but at moment all are shelved either funding / who picks up the tab or planning permission / possible environmental objections.

Its not cost free and roughly each project costs £500m upwards.
Each would give a max 4/5 days of storage at peak use, so you can see why on a purely cost / profit basis it may be difficult to justify.

Usual story - easier for governments to invest in vanity projects like HS2 or dole out pensioners bus passes or kids free meals than invest in humdrum infrastructure like roads, ports and energy.

Not many votes in gas storage.

kabayiri

Kennyboy66 wrote: »

...
Not many votes in gas storage.

It's just not as glamorous as supporting banks of windmills sat offshore.

This government has been overspending by £10bn a month for ages now.

What's a few storage facilities at £500m a pop going to do to our £1trn debt mountain? Not that much.

The net cost is likely to be lower anyway, with taxation from the jobs generated.

chucky

CLAPTON wrote: »

It would be slightly odd for a PLC to publicly feel the need declare they don't plan to invest in a loss making project especially when the government declares we don't have a problem with security of supply.

Not really.

Like any business it's all about risk. A company willing to invest a huge amount in gas storage could bring the gas price down and make them the best price in the market. On the other hand fracking may take place, making the additional storage argument invalid and waste of money.

MFW_ASAP

http://www.energy.eu/

This site shows that the UK prices are actually quite low compared with our European neighbours. The issue we have is that we have had lower energy prices because we were a net energy exporter. We are not anymore and so we have to compete against other countries to make up the difference.

Low energy prices encourage energy wastage. Just look at the US.

If the UK had higher energy prices while we were awash with North Sea oil, our housing stocks would be far more energy efficient and these rises would not hit us quite so hard. The problem is the famously inefficient housing stock, not the cost of energy.

New housing is subject to much stricter building regulations and have to meet quite stringent u value and airtightness targets. No where near passive house standards (which require no heating), but a country mile away from most existing housing.

MFW_ASAP

shortchanged wrote: »

This is fine and I'm sure all these schemes have helped reduced waste. But once everything has been done it doesn't help any more when the cost of the fuel goes up so vastly every year, as I stated earlier way above inflation.

With enough insulation and quality glazing, there is no need for heating at all. This type of house fitted with solar panels would be a net exporter of energy and actually earn money. Price rises in this case would then be welcomed because the house would earn more.

grizzly1911

MFW_ASAP wrote: »

http://www.energy.eu/

This site shows that the UK prices are actually quite low compared with our European neighbours. The issue we have is that we have had lower energy prices because we were a net energy exporter. We are not anymore and so we have to compete against other countries to make up the difference.

Low energy prices encourage energy wastage. Just look at the US.

If the UK had higher energy prices while we were awash with North Sea oil, our housing stocks would be far more energy efficient and these rises would not hit us quite so hard. The problem is the famously inefficient housing stock, not the cost of energy.

New housing is subject to much stricter building regulations and have to meet quite stringent u value and airtightness targets. No where near passive house standards (which require no heating), but a country mile away from most existing housing.

UK prices are no directly comparable due to taxation differences and where those taxes are collected and applied.

When you have undertaken most commercially acceptable improvements to your property unfortunately the cost of the base energy supply still increases by whatever rate is felt necessary.