UK energy supply forecasts 'into the red' for first time next winter

fredandwilma

Interesting article here, bearing in mind it is only a forecast :-



http://www.telegraph.co.uk/news/earth/energy/12175367/UK-energy-supply-forecasts-into-the-red-for-first-time-next-winter.html



http://www.telegraph.co.uk/news/earth/energy/12179216/Households-face-higher-energy-bills-under-new-plan-to-keep-the-lights-on.html


http://www.newpower.info/2016/06/opinion-winter-is-coming-bringing-a-perfect-storm-for-electricity-system-price-rises/


http://www.telegraph.co.uk/news/2016/04/07/uk-will-have-too-much-electricity-this-summer-national-grid-fore/


Britain could be forced to rely on imports and costly emergency measures to prevent blackouts, official data suggests.

Sosumi

Interesting.

But I think only fellow subscribers to The Telegraph will be able to read three of the four articles to which you have kindly provided links?

fredandwilma

There are only three.

Fourth is :-


http://www.newpower.info/2016/06/opinion-winter-is-coming-bringing-a-perfect-storm-for-electricity-system-price-rises/

Winter is coming
As we roll forward toward Winter 2016/17, National Grid will have to balance the system with less generation available because of recent plant closures. At the same time a large portion of the market that played a crucial role in balancing the system last winter is now excluded from the main market and will only be able to participate through SBR.
On days with little solar and wind generation – which now play an increased role in Britain’s power generation mix – the SBR units that were active in the market last winter may well play a key role in facilitating a well-supplied system, in turn bumping up system prices and subsequently taking market prices ever higher.
In some respects this activity is positive for the system. In recent years, generators on the margins of the market have been earning insufficient margins and this has been the primary driver behind recent plant closures. By increasing the rewards for generating on days of tight margins, the system hopes to slow the rate of closures that are affecting the market. However, in the precarious world of power sector economics, for some supply units an unforeseen fault or trip when the penalty price is so high could mean serious cash flow issues and, potentially, plant closures. For some the question will be if this really is a risk worth taking.

“Less diversified generation portfolios could be heavily exposed to the consequences of high and potentially unexpected system prices.”

All this increases the stakes for winter 2016/17 and although many generators could win big, profit greatly and keep their least viable plants open as a result, those with less diversified generation portfolios could be heavily exposed to the consequences of high and potentially unexpected system prices. Smaller suppliers and other participants in the market that operate at a distance through contracts that expose them to system prices could also face unexpectedly high bills.
Time will tell who will win and lose from this activity, but for the sake of the market, let’s hope that generators and suppliers are able to navigate through the winter without getting hit by a knockout blow.



This article was first published in the June 2016 issue of New Power.

fredandwilma

Another interesting article here :-

https://www.theenergyshop.com/HomeEnergy/advice-articles-energy-bills-time-to-switch#.V7HMwlQrLNN


My feeling is the market has bottomed, too. I'd be very surprised if i switch 4 or 5 times in the coming 12 months. I think those days have gone?

I've done a price comparison today and none can compete with the tariff i'm currently on.

It will be interesting to see what all the collectives (including CEC,) have to offer this autumn / winter / spring.

Charts and Analysis August 2016

Energy switching update - August 2016
This brief note provides an update on energy prices and potential savings from switching.
As we predicted in our note of 2 June 2016, entitled Energy bills have bottomed. Time to switch!, the price of the cheapest energy tariffs bottomed at the beginning of June 2016, and has been on a steady rise since.
Much has been written about Brexit and energy prices recently. To be clear, Brexit did not cause this. The energy markets bottomed as early as February 2016 and some, like oil, have risen significantly since then. Energy prices were heading up with or without the Brexit vote. Brexit did however help push the thing along (as a result of the approximate 10% devaluation of sterling versus the US dollar since then).
Over the past 2 months the cheapest energy tariff has increased by £29.
Standard variable tariffs for the Big 6 have not changed since they were last cut by £32 in March/April (Figure 1).
Consequently savings from switching have contracted by £53 from a record high of £378 in March 2016 to £325 in August.

Comment

"The best possible savings are now gone and will not be coming back any time soon. The good news is that savings from switching, at £325 for the average domestic household, are still extremely high by historic standards. Now still remains a great time to switch and bag some incredible savings before prices increase further."

"A word of caution; be careful who you switch to. Several of the smaller energy suppliers take payments in advance of the customer coming on supply. This means that the customer's money is at risk if things go badly. Do your research and understand the risk of switching to a smaller supplier."

Published 2 August 2016

Domestic Energy Tariffs
The cheapest energy tariffs have not yet started to rise; but they are also no longer falling.
Analysis shows that the cheapest tariffs in the market, typically 1 year fixed deals, have tracked oil prices lower over the past 2 years. Since January 2014, the market's cheapest deal 4 has fallen from £986 a year for a household with average usage to just under £750 today. This is shown in Figure 1. What Figure 1 also shows is that those price falls have stalled over the past 4 months, even as the level of competition has increased.

According to " -" , energy tariffs have yet to head higher but that is now the greater risk. Despite rising wholesale gas and electricity markets, the cheapest energy tariffs have been stuck at low levels for 4 months, a position which is not sustainable. - believes this could be happening because smaller suppliers are buying seasonally low priced energy and selling it forward on 1 year contracts hoping that spot prices stay low. This would work if spot prices remain weak. However, it could also end in disaster if seasonal prices rally into the winter or an unexpected event shifts wholesale prices higher. Customers who have paid their bills in advance would be left with their money at risk.
What next?
Tariff data from shows that energy bills for customers on Standard tariffs have fallen by £81 since January 2014. In contrast, the cheapest deals have fallen by £237; almost 3 times as fast. This has presented consumers on standard tariffs with simply extraordinary gains from switching; over £350 for the typical household. Figure 2.
The warning signs are that this will now start to reverse. It is time to take the money on table and lock away a cheap fix before prices start heading higher.

"Falling energy prices has resulted in a savings bonanza for those who are prepared to switch. Customers on standard tariffs can still save over £350 a year moving to a discounted fixed tariff."

"The leading indicators are now suggesting that the best is probably over. With an increasing risk that the cheapest deals will start to rise, it is time to take the money on offer and lock away a competitive 1 year fix while prices are today"s low prices."

"But be careful who you switch to. Several of the smaller energy suppliers take payments in advance of the customer coming on supply. This means that the customer's money is at risk if things go badly. Do your research and understand the risk of switching to a smaller supplier."



Published 2 June

fredandwilma

http://www.telegraph.co.uk/business/2016/07/07/brexit-pushes-uk-energy-prices-towards-nine-month-highs/




8 JULY 2016 • 12:01AM
UK energy prices climbed to near nine-month highs in the aftermath of the EU referendum as the market began to anticipate winter blackouts.

The UK’s gas and power markets have been rocked in recent months by heavy infrastructure maintenance, unplanned shutdowns and political turmoil, leading to the most volatile quarter of trading in the last two years and a stark break from the market’s steady decline since 2013.

Market experts at ICIS said the price of gas climbed 29pc over the second quarter while wholesale electricity prices rose 25pc. The energy market’s second-quarter rally received a further boost from the UK’s vote to leave the European Union, the analysts added.

“UK energy prices were boosted early in the quarter with supply concerns for both gas and power, and rose further towards the end of the quarter with shifting sentiment over the EU referendum,” according to ICIS’ latest report.

“The Brexit result then pushed prices towards nine-month highs, due to the collapse in value of the pound, which boosted demand for British energy from traders dealing in euros,” the report added.

In addition, the UK is a net importer of gas and coal, which are traded in dollars, meaning that a prolonged post-Brexit sterling slump could mean higher energy prices in the long term.

The UK energy system has been wracked by multiple power plant closures in the past year, which have raised the risk of skyrocketing prices and supply cuts during the high-demand winter months.

By the end of the first quarter the UK had lost 5GW of cheap coal-fired power, the equivalent of 10pc of the UK’s peak power demand. But concerns have escalated further after energy giant Engie, formerly known as GDF Suez, took its 1GW Rugeley coal-fired plant offline. Germany’s RWE said it would also take its 1.6GW Aberthaw plant out of the market from April 2017.

Plans from Government to plug the looming gap in the UK’s energy supplies have come under persistent criticism for failing to bring forward fresh investment in new-generation power plants while paying older, polluting plants to keep running.

“More coal-fired plants have come offline, and electricity supply margins remain tight for the winter,” said Jamie Stewart from ICIS. He added that generators’ rising dependence on more expensive gas is also helping to boost electricity prices.

According to the ICIS power index, wholesale power reached an average of £38.12 a megawatt-hour in Q2, up 9pc from the first quarter, and gas prices rose 12pc to 36.14 pence a therm.

fredandwilma

Wednesday, Aug 17th 2016

Gas and electricity prices on rise
Millions of consumers face higher gas and electricity bills in the New Year, it has emerged.

Powergen announced that it is to increase electricity and gas prices for the majority of its six million customers January 5.
The company said it was raising prices as a result of "a number of pressures facing all energy suppliers", citing higher wholesale costs as the major factor.
The price of wholesale electricity has risen 25% over the past year, with gas up 18%, the company said.
Powergen customers who are affected will see an average increase of 6.9% for electricity and 4.9% for gas.
For ordinary domestic Powergen customers, this is equivalent to 38p a week for electricity and 27p a week for gas.
Domestic Powergen customers on capped price products or small business contract customers will see no change until their contracts end.
Prices for prepayment meter, Age Concern and Staywarm customers are unchanged for the moment.
Nick Horler, managing director, Powergen Retail said: "Powergen is not alone in facing these increasing costs but it is the only leading energy supplier not to have raised its consumer electricity prices in seven years."

http://www.dailymail.co.uk/news/article-202098/Gas-electricity-prices-rise.html




I'm so glad i have my 2 year fix. I found an old bill from 2012 yesterday, and i was paying considerably more for my energy, 4 years ago.

What goes up has to come down, but what comes down has to go up?

buglawton

Is this something to do with Summer being a slow news period?

Aug 2014
UK's blackout risk rises as power plants falter
http://utilityweek.co.uk/news/uk%E2%80%99s-blackout-risk-rises-as-power-plants-falter/1044302#.V7SdRnqu3X4

July 2015
Electricity blackouts risk up, says National Grid
http://www.bbc.co.uk/news/business-33527967

Anyway, the chances are the UK will one day face blackouts due to over-demand. Going to happen because govt policy never changes till AFTER the event.

Lots of options once a policy is formulated - smart meters, time sensitive pricing, etc, etc. Overnight there is always massive overcapacity.

Courtesy of: GTM Research
http://www.greentechmedia.com/articles/read/changing-the-energy-vs.-capacity-balance

fredandwilma

Maybe, but on the other hand, this is the third year that National Grid has had to prepare such emergency measures, which were originally only intended to last for two winters.


Either way, it does look likely to happen at some point and the costs of which will be passed on to consumers through their energy bills?

8 JULY 2016 • 1:47PM
Britain may have to rely on costly emergency measures to keep the lights on this winter after spare capacity in the power market fell to the lowest level on record.

Power stations operating under normal market conditions will produce barely enough electricity to meet peak demand following a series of coal plant closures, National Grid analysis shows.

The "spare margin" between peak electricity demand and the supplies likely to be available in the market has fallen to just 0.1pc, the lowest on record.




As a result, National Grid has been forced to intervene and bolster supplies by paying 10 power plants £123m to stay open through an emergency scheme, the costs of which will be passed on to consumers through their energy bills.

It will then make additional payments to these back-up power plants to fire up, if they are needed as a "last resort" to prevent blackouts. These costs, which could easily run to tens of millions of pounds in a cold snap, will also be passed on to consumers.

The emergency scheme will bring the UK's overall spare power margin up to 5.5pc, a "manageable" level to keep the lights on, the company said.


This is the third year that National Grid has had to prepare such emergency measures, which were originally only intended to last for two winters.

However, the underlying situation has deteriorated since last year, when there was still spare margin in the main electricity market of 1.2pc.

Last winter the emergency measures, which bolstered the overall margin to 5.1pc, were only called upon once, in early November.

With the underlying margin now falling to a wafer-thin 0.1pc, it appears more likely that the back-up plants will have to be called upon at extra cost to consumers.

Follow
National Grid UK @nationalgriduk
National Grid has published its annual Winter Consultation Report for Winter 2016/17 http://!!!!!!/4Jq33022RjQ
10:38 AM - 8 Jul 2016


National Grid analysis suggests that there will be almost 14 hours over the course of the winter when there is likely to be insufficient power in the market to meet demand and it may have to call on the emergency scheme.

Cordi O’Hara, director of UK System Operations at National Grid, said: "The surplus margin for this winter is 5.5pc. This is the additional power we expect to have available over and above what is needed to meet electricity demand.

"We believe the margin is manageable and that we have the right tools and services available, including extra power we can call on if we need it, for times of highest demand.

"We expect there to be sufficient gas supplies available to meet demand which will be met from a wide range of supply sources."

Amber Rudd, the energy secretary, said: "When it comes to making sure our families and businesses have the certainty of secure energy supplies they can rely on now and in the future, I’m clear that this comes first and it is not negotiable. I will take no risks with the security of our energy supply, which is why we have taken prudent steps to protect supplies ahead of this winter."

From winter 2017/18 the emergency scheme will no longer apply, with the Government instead relying on a new policy called the 'capacity market' to ensure supplies are adequate.

This will provide retainer-style subsidy payments to all power plants that are deemed necessary to keep the lights on to guarantee they will be available when needed.

Ms Rudd said: "In the longer term the Capacity Market is acting as an insurance policy for our electricity needs, securing future supplies at the lowest possible cost to consumers."

A spokesman for National Grid added that although 0.1pc was the lowest "de-rated margin" it had on records dating back to 2001, the methodology had changed over the years.