Gas wholesale prices.

peter_the_piper

Any idea why the wholesale prices of all the energy companies suddenly went up and in the summer. I could understand it going up in the winter (maybe) but why now?

[Deleted User]

peter_the_piper said:

Any idea why the wholesale prices of all the energy companies suddenly went up and in the summer. I could understand it going up in the winter (maybe) but why now?

Google is your friend

https://www.economist.com/graphic-detail/2021/09/20/what-is-behind-rocketing-natural-gas-prices

The short version. Gas demand was high last Winter; the UK has very little gas storage and even with the little that we have got the Government failed to top it up; LPG supplies turned East rather than West: no wind so that 50% of our electricity comes from gas; high demand in Europe etc. Despite what BJ might say, experts believe that we are in for a very difficult Winter and a massive hike in prices in April 2022 if not before.

A._Badger

[Deleted User] said:

peter_the_piper said:

Any idea why the wholesale prices of all the energy companies suddenly went up and in the summer. I could understand it going up in the winter (maybe) but why now?

Google is your friend

https://www.economist.com/graphic-detail/2021/09/20/what-is-behind-rocketing-natural-gas-prices

The short version. Gas demand was high last Winter; the UK has very little gas storage and even with the little that we have got the Government failed to top it up; LPG supplies turned East rather than West: no wind so that 50% of our electricity comes from gas; high demand in Europe etc. Despite what BJ might say, experts believe that we are in for a very difficult Winter and a massive hike in prices in April 2022 if not before.

To which needs to be added the suicidal decision to phase out coal fired electricity generation, massively underinvest in nuclear, and completely ignore the vast reserves of gas underground in the UK, to appease the noisy 'Green' lobby. This was a self-inflicted accident waiting to happen. 

jimjames

A._Badger said:

Dolor said:

peter_the_piper said:

Any idea why the wholesale prices of all the energy companies suddenly went up and in the summer. I could understand it going up in the winter (maybe) but why now?

This was a self-inflicted accident waiting to happen. 

No the self inflicted accident was this one by removing storage to smooth prices. It was warned at the time and ignored. The government and regulator could have taken action about the closure below and were warned that prices would be more volatile. That's exactly what has happened. 

 https://www.theguardian.com/business/2017/jun/20/uk-gas-storage-prices-rough-british-gas-centrica

Armengar

The UK has no gas reserves and our electricity backstop is gas.  I cannot give you up to date information but back in the 80s I worked for national grid near preston.  we used to schedule from there and this time of year was a typical "low usage", the nuclear power stations would run maintenance and wouldnt often bid for the day generation.  Renewables were fairly low key back then (but still existed somewhat), the majority was coal but we still had gas as backup.  It is all down to how fast they can spool up to demand.

Since gas is the quickest for spooling up (good old dinorwig was used for peak on a daily basis but does need to "recharge") then this is why electricity prices are on the up.  Wind is great when it is "just the right level of wind" but outside this, not so much.  We dont run as much nuclear as "back then" and we have phased coal out of quite a few power stations.  Electricity use has increase more than gas so the power stations are eating up current demand.

I would imagine that in the current climate, dinorwig would not be running at capacity as it would be too expensive to recharge.  My information is out of date of course but the idea was to use cheap overnight electricity from nuclear mainly (they cant run at too much of a minimum whereas the coal and gas could)

A._Badger

jimjames said:

A._Badger said:

Dolor said:

peter_the_piper said:

Any idea why the wholesale prices of all the energy companies suddenly went up and in the summer. I could understand it going up in the winter (maybe) but why now?

This was a self-inflicted accident waiting to happen. 

No the self inflicted accident was this one by removing storage to smooth prices. It was warned at the time and ignored. The government and regulator could have taken action about the closure below and were warned that prices would be more volatile. That's exactly what has happened. 

 https://www.theguardian.com/business/2017/jun/20/uk-gas-storage-prices-rough-british-gas-centrica

You are isolating just one of several factors. It is true that BG decided to scale back its gas storage facility and that the government of the day stupidly chose not to intervene. That, however, was just one element in a train of policy decisions that led to were we are today - almost entirely dependent on gas.