Gas and electric price link

peter_the_piper

I hope that this is correct. https://www.dailymail.co.uk/news/article-10910943/Britons-save-soaring-bills-ministers-plan-end-link-gas-electricity-prices.htmlI I never knew there was a link in the prices in that if gas goes up then so does electricity.

victor2

Wouldn't doubt the Mail for a moment , but isn't the "link" between gas and electricity prices mainly because a substantial amount of our electricity is generated by burning gas?

markin

Unless the gov are going to pay the difference, I cant see how it could work.

pochase

You cannot change the price for the gas you are burning to generate electricity.

So that would mean companies supplying electricity are no longer allowed to sell it at market price, for this to work. So is the government going to take over all suppliers of renewable energy to ensure that they sell there electricity under price?

QrizB

pochase said:

So that would mean companies supplying electricity are no longer allowed to sell it at market price, for this to work. So is the government going to take over all suppliers of renewable energy to ensure that they sell there electricity under price?

It seems to be a proposal for some mechanism to reduce the price paid to wind, solar and nuclear operators who are trading outside of CfD arrangements.
I struggle to see how it could work but I'm not Ofgem.

njm123

pochase said:

You cannot change the price for the gas you are burning to generate electricity.

So that would mean companies supplying electricity are no longer allowed to sell it at market price, for this to work. So is the government going to take over all suppliers of renewable energy to ensure that they sell there electricity under price?

If it happens the proposal is to sell electric at market price, without the existing windfall.

Currently for electricity sold outside the CfD arrangements, the wholesale price to the suppliers is determined as the MWh rate of the most expensive energy required to meet the demand.    The proposal as far as I can work out is to use the actual MWh rate of each component needed to meet the demand.

As a gross oversimplification at the moment if 50% of electricity needed to meet demand comes from renewables at £100 per MWh the rest came from gas at £200 per MWH.  At the moment the suppliers would pay £200 per MWh (as gas is more expensive), the proposal should reduce that to £150 per MWh.

markin

I read a comment that Germany did it and the suppliers simple shut down, would we want all the nuclear to decide its not worth it and close? And old wind not to be maintained any longer?

More research into what happened in Germany needed.