Why are electricity prices linked to gas prices?

friendsrgreat

I had an email from Octopus. It said electricity prices were going up because the cost of electricity in the UK is linked to the cost of gas. This seems idiotic to me as the UK doesn't produce gas. I wonder why it can't be unlinked - does anyone know?

Rolandtheroadie

Gas powered power stations

Merlin139

Check out this and you can see where the Electricity is coming from. Normally Gas is around 40%

https://grid.iamkate.com/

QrizB

Rolandtheroadie said:

Gas powered power stations

Exactly this. According to Electric Insights, over the past year the UK has generated 37% of its electricity by burning gas in power stations.

[Deleted User]

As at Aug 21:

Quote: Natural gas piped from the North Sea and the East Irish Sea to refineries on land makes up 44% of the UK’s gas production.

Around 47% of the UK’s gas supply now comes from across Europe - predominantly Norway, Netherlands, Belgium, and Russia - through long distance pipelines.

While 9% of the UK’s gas is imported as liquid natural gas transported around the world in tankers at temperatures below -160C by ship, mainly from Qatar. Unquote

It is supplies from Europe and Qatar that has given us a lot of problems. Germany has turned off a lot of its nuclear reactors in favour of gas. China has a massive demand for gas post-Covid and Qatar supplies have been going to China which is prepared to offer Top $.

smileguy

Hi friendsrgreat I don’t understand it because EDF state my energy is 100%green nuclear energy so no reason the costs of nuclear energy should rise overnight 🤷‍♂️🤷‍♂️

Verdigris

smileguy said:

Hi friendsrgreat I don’t understand it because EDF state my energy is 100%green nuclear energy so no reason the costs of nuclear energy should rise overnight 🤷‍♂️🤷‍♂️

Nuclear doesn't need to rise. It is already the most expensive form of energy generation.

markin

They all sell at the market rate to make as much profit as they can, the most expensive right now is Gas so that is setting the price.

mumf

When everyone understands that natural resources are running out,and cheap prices are history,then we will move on. The gravy train is derailed. Ain’t no more cheap fuel’cos there ain’t no more new energy fields.

[Deleted User]

markin said:

They all sell at the market rate to make as much profit as they can, the most expensive right now is Gas so that is setting the price.

True. This is what Octopus has to say about the current pricing model:

Quote: 

One question we get quite a lot: why would a supplier who sells 100% green tariffs be impacted by high fossil fuels prices?

Green electricity now costs less to generate than fossil fuel power. So shouldn't that mean green power costs less to buy on the market? Because of the (very flawed) way the market is currently set up, sadly not, though as the grid gets greener, this should change. The price power sells for is dictated by the going rate for all different types of energy. At the moment, all energy sources in the UK, from wind to solar to fossil fuels, are being sold based on the high price of gas imports – the higher price of 'brown' electrons artificially putting up the price of 'green' ones as well.

🏠 It’s like selling a house; the price is set by what neighbouring homes are sold for, not the actual cost of building the house. Unquote

Thrugelmir

smileguy said:

Hi friendsrgreat I don’t understand it because EDF state my energy is 100%green nuclear energy so no reason the costs of nuclear energy should rise overnight 🤷‍♂️🤷‍♂️

Uranium has risen 47% in price in the past 12 months. Energy is in short supply globally.