Decoupling of electricity and gas prices

jj_43

70sbudgie said:

The interconnectors with other markets only work (make money by selling electricity) when the prices in the two markets at either end are different. At the moment we are selling electricity to France because they have even bigger problems than we do and therefore their electricity market price is even higher than ours. This is contrary to historical use, where we have mostly imported their nuclear generated electricity.

Yes they give trading opportunities to those who purchase the interconnector capacity. Importing cheap French nuclear and selling it to UK customers is a very profitable trade. And exporting our energy to French at higher cost is very profitable. Unfortunately us customers have to bear even higher prices and get zero benefit in the energy casino.

jcontest

Fairzo said:

macman said:

The problem is that we are still producing about 45% from gas fired plant. 

But 55% which isn't, so there's a profiteering on renewables which could instead lower electricity unit rates?

I think the correct term would be "windfall" and not "profiteering".

Hinkley point 2 currently has a strike price of 132 per MWh, but an awful lot of people have accepted that.  35 years of Inflation-Linked overpriced electricity... Until Hinkley C (and probably Sizewell C) have their cost paid back then you shouldn't expect any meaningful seperation on your bills.  My 0.02..

It's laughable that people think renewables are the devil here.

[Deleted User]

jj_43 said:

Section62 said:

jj_43 said:

Section62 said:

jj_43 said:

Section62 said:

jj_43 said:

it can be achieved by decoupling our energy from the international markets which will be the solution needed.

So if we do that, UK consumers will be paying more on their bills to fund the additional generation capacity required for resilience, which is currently achieved in part by being linked to our neighbours.

Also, we are currently (and have been for much of at least the last week) sending about 3GW of electricity to France - about 9% of what is currently on the UK Grid.  If we cut outselves off from the international markets we would lose the opportunity for UK consumers to be subsidised by selling energy to other countries that need it.  And cutting ourselves off from the Republic of Ireland in particular may have 'political' consequences.

We are - whether you like it or not - part of the international energy markets.  Changing that won't necessarily lead to a better outcome.

"If we cut outselves off from the international markets we would lose the opportunity for UK consumers to be subsidised by selling energy to other countries that need it."

lol, repeat lol. It doesn't work like that at all.

Feel free to explain...

ok

the industry model is each energy company has downstream, midstream, upstream p&l.
downstream is the energy retailer to the customer. midstream is the trading unit for the downstream p&l, upstream has all the assets (generation, gas, oil). Each p&l feeds into group, they have strategies, targets, kpi to meet.

downstream will forecast demand, and do hedging. They ask midstream to sell/purchase, who transact at the market price quoted on screen. 

downstream will price and create tariffs for the customer. They add up all the costs, including latest commodity costs to form the price and tariff is created.

In these activities there is no decision or conversation such as "upstream are making 8 times more on gas this year" so we have £100m to give to downstream, or lets buy LNG from the US and ship it over to UK and use this cheap gas to provide a cheap tariff to customers that advantage is for the upstream or midstream p&l.

Where has it been suggested that such a "decision or conversation" occurs?  Or is 

I refer you to the posts of SparkyGrad and QrizB.  Your description of the "industry model" makes no reference - other than perhaps the vague "strategies, targets, kpi" - to the obligations the industry has to keep the lights on, with a supply which conforms to the statutory requirements, and to achieve that 24/7 against a background of variable demand.

The cost of security of supply and resilience is factored into what the consumer ends up paying.

By linking our grid with that of neighbouring countries we are able to both i) invest less in 'spare' generation capacity and ii) use surplus generation capacity to help our neighbours (at a cost to them)

Going 'solo' would mean either accepting a less reliable and stable supply or making further investment to achieve that reliability and stability exclusively from our own resources.  Further investment = increased costs.

jj_43 said:

as others put it, why would I sell something to you for a £1, when i can sell it for £2?

Because a regulator has told you that you can only be in business selling things (either for £1 or £2) provided you follow certain rules, one of which is ensuring you having enough good quality £1 stuff to sell?  (grossly oversimplified, but for reasons of clarity)

I don't know your mates "SparkyGrad and QrizB" I assume they are not in these meetings and listen to what is told them.

That would be the SparkyGrad that has spent over a decade working in the industry, including in generation optimisation, energy trading, energy market design and both UK and EU energy policy?

ariarnia

[Deleted User] said:

jj_43 said:

Section62 said:

jj_43 said:

Section62 said:

jj_43 said:

Section62 said:

jj_43 said:

it can be achieved by decoupling our energy from the international markets which will be the solution needed.

So if we do that, UK consumers will be paying more on their bills to fund the additional generation capacity required for resilience, which is currently achieved in part by being linked to our neighbours.

Also, we are currently (and have been for much of at least the last week) sending about 3GW of electricity to France - about 9% of what is currently on the UK Grid.  If we cut outselves off from the international markets we would lose the opportunity for UK consumers to be subsidised by selling energy to other countries that need it.  And cutting ourselves off from the Republic of Ireland in particular may have 'political' consequences.

We are - whether you like it or not - part of the international energy markets.  Changing that won't necessarily lead to a better outcome.

"If we cut outselves off from the international markets we would lose the opportunity for UK consumers to be subsidised by selling energy to other countries that need it."

lol, repeat lol. It doesn't work like that at all.

Feel free to explain...

ok

the industry model is each energy company has downstream, midstream, upstream p&l.
downstream is the energy retailer to the customer. midstream is the trading unit for the downstream p&l, upstream has all the assets (generation, gas, oil). Each p&l feeds into group, they have strategies, targets, kpi to meet.

downstream will forecast demand, and do hedging. They ask midstream to sell/purchase, who transact at the market price quoted on screen. 

downstream will price and create tariffs for the customer. They add up all the costs, including latest commodity costs to form the price and tariff is created.

In these activities there is no decision or conversation such as "upstream are making 8 times more on gas this year" so we have £100m to give to downstream, or lets buy LNG from the US and ship it over to UK and use this cheap gas to provide a cheap tariff to customers that advantage is for the upstream or midstream p&l.

Where has it been suggested that such a "decision or conversation" occurs?  Or is 

I refer you to the posts of SparkyGrad and QrizB.  Your description of the "industry model" makes no reference - other than perhaps the vague "strategies, targets, kpi" - to the obligations the industry has to keep the lights on, with a supply which conforms to the statutory requirements, and to achieve that 24/7 against a background of variable demand.

The cost of security of supply and resilience is factored into what the consumer ends up paying.

By linking our grid with that of neighbouring countries we are able to both i) invest less in 'spare' generation capacity and ii) use surplus generation capacity to help our neighbours (at a cost to them)

Going 'solo' would mean either accepting a less reliable and stable supply or making further investment to achieve that reliability and stability exclusively from our own resources.  Further investment = increased costs.

jj_43 said:

as others put it, why would I sell something to you for a £1, when i can sell it for £2?

Because a regulator has told you that you can only be in business selling things (either for £1 or £2) provided you follow certain rules, one of which is ensuring you having enough good quality £1 stuff to sell?  (grossly oversimplified, but for reasons of clarity)

I don't know your mates "SparkyGrad and QrizB" I assume they are not in these meetings and listen to what is told them.

That would be the SparkyGrad that has spent over a decade working in the industry, including in generation optimisation, energy trading, energy market design and both UK and EU energy policy?

and whos freely shared knowledge and advice is greatly appreciated by those who are not trying to win an argument. 

jj_43

Deleted_User said:

jj_43 said:

Section62 said:

jj_43 said:

Section62 said:

jj_43 said:

Section62 said:

jj_43 said:

it can be achieved by decoupling our energy from the international markets which will be the solution needed.

So if we do that, UK consumers will be paying more on their bills to fund the additional generation capacity required for resilience, which is currently achieved in part by being linked to our neighbours.

Also, we are currently (and have been for much of at least the last week) sending about 3GW of electricity to France - about 9% of what is currently on the UK Grid.  If we cut outselves off from the international markets we would lose the opportunity for UK consumers to be subsidised by selling energy to other countries that need it.  And cutting ourselves off from the Republic of Ireland in particular may have 'political' consequences.

We are - whether you like it or not - part of the international energy markets.  Changing that won't necessarily lead to a better outcome.

"If we cut outselves off from the international markets we would lose the opportunity for UK consumers to be subsidised by selling energy to other countries that need it."

lol, repeat lol. It doesn't work like that at all.

Feel free to explain...

ok

the industry model is each energy company has downstream, midstream, upstream p&l.
downstream is the energy retailer to the customer. midstream is the trading unit for the downstream p&l, upstream has all the assets (generation, gas, oil). Each p&l feeds into group, they have strategies, targets, kpi to meet.

downstream will forecast demand, and do hedging. They ask midstream to sell/purchase, who transact at the market price quoted on screen. 

downstream will price and create tariffs for the customer. They add up all the costs, including latest commodity costs to form the price and tariff is created.

In these activities there is no decision or conversation such as "upstream are making 8 times more on gas this year" so we have £100m to give to downstream, or lets buy LNG from the US and ship it over to UK and use this cheap gas to provide a cheap tariff to customers that advantage is for the upstream or midstream p&l.

Where has it been suggested that such a "decision or conversation" occurs?  Or is 

I refer you to the posts of SparkyGrad and QrizB.  Your description of the "industry model" makes no reference - other than perhaps the vague "strategies, targets, kpi" - to the obligations the industry has to keep the lights on, with a supply which conforms to the statutory requirements, and to achieve that 24/7 against a background of variable demand.

The cost of security of supply and resilience is factored into what the consumer ends up paying.

By linking our grid with that of neighbouring countries we are able to both i) invest less in 'spare' generation capacity and ii) use surplus generation capacity to help our neighbours (at a cost to them)

Going 'solo' would mean either accepting a less reliable and stable supply or making further investment to achieve that reliability and stability exclusively from our own resources.  Further investment = increased costs.

jj_43 said:

as others put it, why would I sell something to you for a £1, when i can sell it for £2?

Because a regulator has told you that you can only be in business selling things (either for £1 or £2) provided you follow certain rules, one of which is ensuring you having enough good quality £1 stuff to sell?  (grossly oversimplified, but for reasons of clarity)

I don't know your mates "SparkyGrad and QrizB" I assume they are not in these meetings and listen to what is told them.

That would be the SparkyGrad that has spent over a decade working in the industry, including in generation optimisation, energy trading, energy market design and both UK and EU energy policy?

ohh I was there at the start of NETA when i joined as a Grad and had quite abit of involvement in energy market design, so probably +15 years experience.

strange/interesting how you refer to yourself in the third person. It's so odd i decide to google it, very interesting, but i won't think too much into it.

[Deleted User]

Top trolling sir - have a gold star.