Market cost of Electric

smartn2

Tracking the price of UK Electric  yesterday, according to Drax insights the average cost per MWh reached £777.90 averaged out over the 24 hour period. Same time last year was £61.05. That's a factor of over 10x as much. 

I can't see how more Energy companies won't go under pretty soon if the government don't sort out a medium to long term solution and one way or another the cost will be passed on to us for failure in policies. I have solar panels, I drive an electric car but renewables are not going to cut it for the next 5-10 years. Anyone any ideas how we get out of this mess?

QrizB

smartn2 said:

Anyone any ideas how we get out of this mess?

The first thing is, don't pay too much attention to balancing mechanism prices (the ones shown by default on the Drax site). They're a lot more volatile than day-ahead prices and reletively little electricity changes hands at that price. The day-ahead price on Drax was £444 and at Nordpool was £284.

The second is, read this thread where we're tracking wholesale prices and making educated guesses at the April Ofgem cap. Yes prices are going to rise significantly. That's everyone's problem and not something the government can magically fix without causing worse problems elsewhere.

The third (and final) is, you state:

I can't see how more Energy companies won't go under pretty soon if the government don't sort out a medium to long term solution and one way or another the cost will be passed on to us for failure in policies.

Energy companies going bust is not, directly, the government's concern. Energy co's know the rules of the UK domestic energy market and have built their business plans accordingly. Some plans have turned out to be more robust than others. (There's even an argument to be made that some suppliers were intended, by their owners, to fail under market stress.)

smartn2

QrizB - Great work on that other thread. Thanks.

Although not directly the governments concern, the reason the companies are going under is due to the pricing mechanism the government introduced and inability to charge at market rates. Agree, companies should have hedged better but I don't think anyone really predicted the current chaos. A few companies failing isn't a bad thing and is the way of the world but it's important that we keep the market competitive and don't end up with a Big 4,