Energy Price Guarantee should it go up in April?

Mstty

As I am eating my cereal and watching ML on GMTV I am torn as personally I don't want the EPG to cost the government and taxpayer's more money from April by keeping the notional cap the same as it is now £2500. Especially as April marks the time when households can cut their energy use significantly.

Followed by a predicted £2400 or lower notional price cap from July.

What are your thoughts?

Apodemus

While my head agrees with you, my inner greedy b**st*rd heart does love "free" money!  

pochase

It is only "free" money if you don't have to pay for it in the long run. 

daveyjp

Not doing it will also cost Government.  40% increase in energy cost from April will be reflected in the inflation figures.

Mstty

daveyjp said:

Not doing it will also cost Government.  40% increase in energy cost from April will be reflected in the inflation figures.

If it's not clear ML was asking for the continuation of the £2500 EPG not the proposed £3000 EPG. They are doing the £3000 EPG and that level of reduction was not up for debate.

Apodemus

pochase said:

It is only "free" money if you don't have to pay for it in the long run. 

Hence the inverted commas...and the smiley!

More seriously, I would be hoping that the northern summer would mean that the new cap will be beyond the actual price and that, by next winter, there will have been time for the pricing mechanism to be reviewed and more accurately reflect average costs of electricity production. (Not that finding a method to encourage renewables at the same time as adequately compensating for maintaining expensive generating capacity for peaks is going to be easy!)

MattMattMattUK

Mstty said:

As I am eating my cereal and watching ML on GMTV I am torn as personally I don't want the EPG to cost the government and taxpayer's more money from April by keeping the notional cap the same as it is now £2500. Especially as April marks the time when households can cut their energy use significantly.

Followed by a predicted £2400 or lower notional price cap from July.

What are your thoughts?

It should go up to the nominal £3k figure, happy for it to be abolished at this stage but I suspect keeping it in place at that level will reassure some people and does reduce the risk of potentially needing to reintroduce something if it all goes wrong again next winter. 

I think we need to get away from the huge taxpayer subsidies that we as a nation seem to have become addicted to over the last few years, even the additional £900 that is being handed out from March probably should not have been introduced. 

Scot_39

Apodemus said:

While my head agrees with you, my inner greedy b**st*rd heart does love "free" money!  

Unless you never pay a penny in tax it isn't free money.

And thats all taxes - IT, Dividend Tax, NI, VAT., Petrol duty, IPT, Council Tax to name but a few.

MattMattMattUK

Scot_39 said:

Apodemus said:

While my head agrees with you, my inner greedy b**st*rd heart does love "free" money!  

Unless you never pay a penny in tax it isn't free money.

And thats all taxes - IT, Dividend Tax, NI, VAT., Petrol duty, IPT, Council Tax to name but a few.

Those who do not make a net contribution are not paying for it, paying a penny just means that they are being subsidised less but not actually paying for it.  

Scot_39

Apodemus said:

pochase said:

It is only "free" money if you don't have to pay for it in the long run. 

Hence the inverted commas...and the smiley!

More seriously, I would be hoping that the northern summer would mean that the new cap will be beyond the actual price and that, by next winter, there will have been time for the pricing mechanism to be reviewed and more accurately reflect average costs of electricity production. (Not that finding a method to encourage renewables at the same time as adequately compensating for maintaining expensive generating capacity for peaks is going to be easy!)

The govt introduced CfD for all renewables 2015 auction and new nuclear in 2012. If the Ofgem cap drops below EPG as predicted in Q3 - chances are the govt will not do very much at all.  They failed to persuade old renewbles suppliers to accept a cap - so had to follow with a windfall tax - the chances of them getting the wider industry to abandon the current bid / pricing system seems pretty slim. 

CfD only a £40 rebate in Q1 23 Ofgem cap - but nearly 20GW more CfD (3GW nuclear, 17 GW renewables max theroretical) capacity due on stream by 2027.

At the moment - we need gas and nuclear - and in the recent past even coal - on "windless" days.

It's not so much peaks in demand - it's not just peak demand it is the normal demand levels - that the troughs in renewables output fail to come close to matching - thats overnight every night for solar, sometimes days even in deep winter for wind, that imposes a constant need for nuclear and gas "reserve" capacity - or a massive increase in potentially very expensive grid level storage.

The rush to renewables has by and large ignored it's biggest achiles heel - variability - by no planning for mass storage built in parallel.

Yes from an environment perspective it's great - as even without that storage we of course burn less gas - much less when it's working well - but we still need to burn almost as much when it isn't. (18.5GW when wind dropped to 2.3GW last Mar)

And to be fair - trying to insist on even a fraction of storage for installed capcity - would likely have killed it off - in the early days.

Autumn 21 - we had problems with a 10 day "still" weather block pattern - and we paid a record price for EU power - to keep SE and London grids up.  To store the difference between winds long term ave c40% output cf installed capacity - c10GW (it's UK summer ave c5GW lower) - and it's Mar 22 weekly average low of 2.3GW - for 10 days would require - 7.7*10*24 = 1848 GWh of energy storage.

The all too realistic expectation based on recent past - is that the new 6GW from renewables licensed in 2019 for 2023-2025 and 11GW in 2022 for 2025-2027 on stream - will produce less than 2 GW at their lowest output.

This won't even allow us to balance planned loss of 3.5GW of coal and 2.5 GW nuclear (Heysham 1 and Hatlepool ) all by 2024 at current extensions - let alone demolish a single gas fed power station. Hinkley C at 3.2GW might have (its years late already) - but now so late that there's another 2.7GW of nuclear planned to shut by 2028 to balance it.

Coire Glas AFAIK the only new active large scale grid level PSH storage build in decades, will have a 30GWh loch "energy store" (just under 10 hrs production of Hinkley or Sizewell C) - and can only feed back 1.5GW actual power (about a half of Hinkley C, and low c.f. winds July 22 installed 25.5GW theoretical capacity). 

Compare c30 to c1850 - and you might see the scale of the storage problem.  Coire Glas was estimated at over £1bn at proposal time - would take 62 of them to match 10 day dip "energy" storage.

Be interesting to know of any other large scale schemes and costs / technologies being built / or planned in UK currently.

When they built Hunterston - they built Ben Cruachan - to store it's output overnight - and feed it back into the grid when needed. 

Drax et al are now I believe in regulatory approval to extend Ben Cruachan itself - increasing it's generating capacity - to c1GW - but AFAIK not actually increasing the loch reservoir - so no new "energy storage" - just increasing it's charge / discharge rates.

superkoopauk

Looks like it will go up

https://www.bbc.co.uk/news/business-64594707