Ofgem Prices from July

GadgetGuru

So correct me if I am wrong - but these prices kick in from 1st July onwards (for the next 3 months)?

My current fixed rate with EON ends on 3rd July this year, and I was of course looking to switch. 
So I am better of waiting until 1st July before doing a comparison and switching in that case (although it means I could move to their variable for a few days until the switch is complete....)?

BarelySentientAI

GadgetGuru said:

So correct me if I am wrong - but these prices kick in from 1st July onwards (for the next 3 months)?

They are the maximum standard variable rate prices from 1 July.

mac.d

GadgetGuru said:

So correct me if I am wrong - but these prices kick in from 1st July onwards (for the next 3 months)?

My current fixed rate with EON ends on 3rd July this year, and I was of course looking to switch. 
So I am better of waiting until 1st July before doing a comparison and switching in that case (although it means I could move to their variable for a few days until the switch is complete....)?

As Martin Lewis explains it, the energy price cap dictates the standard variable rates, it doesn't effect what suppliers choose for their fixes. The price cap is based on past prices (so upcoming July price cap is worked out from the wholesale rates from Feb to May), whereas the rate they set fixes at is based on their buy ahead prices right now, and he can't predict what they'll be in July.

He said it this morning on the radio and has released a mini podcast of that interview (this specific comment is at around 7min 35secs): https://www.bbc.co.uk/sounds/play/p0j006l2

Scot_39

BarelySentientAI said:

Some really interesting bits hidden in the detail (at least to me).

Wholesale cost contribution dropped by about 15% overall, but the CfD contributions in this (paying extra to wind farms when the price is too cheap) went up by 50%.

Network costs were due to drop by 25% but didn't because the balancing costs didn't drop as expected.  Lack of smart meters is a significant technical contributor to that cost.

EBIT allowance dropped by 5% to £38 on the 'average' bill.

Until far more of the latest auctioned wind comes on line CfD is going to be a net adder - possibly an if rather than a when given doubts as to economic viability for some of pricing like fosw sunk the latest auction round - just as it was prior to the Ukraine gas spike.

The highest cfd in 2015 auction iirc was c12p/kWh wholesale at 2012 indexing. 
Actually more expensive than Hinkley now the Sizewell sister plant authorised  (takes sub 10p iirc).
The 2022 got just below 4p (3.7x ?) 2012 iirc.
Round 5 failed to sell offshore license iirc at those sort of rates.

The first true green energy suppliers used to charge a real premium - the remaining excluded from Ofgem cap for a reason.


And it is not the only cost of that renewable energy at farm gates as it were.  Grid connections to wind farms, standby payements for fossil / conventional, curtailment payments in periods when more wind energy available than can transmit for use across grid bottlenecks etc. 

Running two generation systems in parallel and the growth in other costs - as govt / Ofgem load more in policy - up £30 in Apr cap  / debt costs - upto £28, ppm levelisation £10 etc likely to keep bills much higher than pre crisis levels.

And when I comparec Apr 24 to Apr 19 - network costs were £98 higher (despite iirc dropping c£15 in Apr cf Jan 24)

The iirc £1050 low on Ofgem cap - and that at the higher TDCVs - just 3.5 years ago - seems long since gone.

BarelySentientAI

Scot_39 said:

Until far more of the latest auctioned wind comes on line CfD is going to be a net adder 

There was 18 months were that was not true - but seems like that was a blip as you say.  Overall, paying CfD is a good thing because it means prices are low.  Doesn't stop everyone blaming oil companies somehow though.

Scot_39 said:

And it is not the only cost of that renewable energy at farm gates as it were.  Grid connections to wind farms, standby payements for fossil / conventional, curtailment payments in periods when more wind energy available than can transmit for use across grid bottlenecks etc. 

That's mostly in Network Costs (mainly balancing costs, but also some other bits) - not in wholesale contributions.

Scot_39 said:

Running two generation systems in parallel 

We're not.  Nor should we be.  We just have a mix of technologies which are each good and bad at different things.  This is a good thing.

MacPingu1986

Scot - the 2015 CfD auction was small in comparison to the later CfD auctions - only a small % of renewable capacity under CfD contracts are at those early CfD prices - which are only "high" compared to the low price of renewables generally, they still comparable pretty favourably to the prices needed for traditional fossil fuels and nuclear plants to operate.

I'm not sure what you mean about two generation systems being run in parallel? The UK doesn't have this - we have an integrated generation system where (almost) all generators of different technology types feed into the grid. There is capacity on standby but this has *always* been the case including before renewables, nuclear plants and conventional plants trip off, need maintenance, have unplanned outages, demand fluctuates etc..., so the grid has always had a volume of backup and peaker plants to operate when needed. Renewables do create some of a greater need for this, but much less than you would think, which is more than offset by their wider benefits, whether economic or environmental. Grid connections are needed whether the generating site is renewable or not, and network capacity is being upgraded to reduce issues of curtailment.

Bills are higher than pre-crisis levels primarily as a result of the continued higher wholesale price of gas against pre crisis levels, not because of increased renewable capacity.  

Scot_39

Conventional and renewables were the 2 I meant  - both a mix.

Still not sure about Drax wood plants and green subsidies.

And of course there could be another energy crisis when CfD would again restrict pricing.  3 major oil crisis plus Ukraine gas in last 50 years.  Gaza as yet has not sparked another - but West support for Isreal triggered OAPEC in early 70s.

Energy Security has a price. Just not one easy to sell apparently given past decades of political lip service at best.

Scot_39

MacPingu1986 said:

Scot - the 2015 CfD auction was small in comparison to the later CfD auctions - only a small % of renewable capacity under CfD contracts are at those early CfD prices - which are only "high" compared to the low price of renewables generally, they still comparable pretty favourably to the prices needed for traditional fossil fuels and nuclear plants to operate.

I'm not sure what you mean about two generation systems being run in parallel? The UK doesn't have this - we have an integrated generation system where (almost) all generators of different technology types feed into the grid. There is capacity on standby but this has *always* been the case including before renewables, nuclear plants and conventional plants trip off, need maintenance, have unplanned outages, demand fluctuates etc..., so the grid has always had a volume of backup and peaker plants to operate when needed. Renewables do create some of a greater need for this, but much less than you would think, which is more than offset by their wider benefits, whether economic or environmental. Grid connections are needed whether the generating site is renewable or not, and network capacity is being upgraded to reduce issues of curtailment.

Bills are higher than pre-crisis levels primarily as a result of the continued higher wholesale price of gas against pre crisis levels, not because of increased renewable capacity.  

And yet CfD is having a real and significant impact on the wholesale price we now pay -   increased to £37 in £613 wholesale costs  in July cap  - but in reality CfD only impacts electric -  of the order of 10%.  So over 2p/ kWh. 

https://www.ofgem.gov.uk/sites/default/files/2024-05/Summary of changes to energy price cap 1 July to 30 September 2024.pdf

For an energy supply we simply cannot rely on given its huge output variability.

Not to mention network costs of connecting to it and stabilising the grid and its regulation for it as capacity grows in future. Network costs as of Apr up £98 in 5 years from c£300 to c£400.

When - if all the 2019, 2022 round capacity - is installed we will have over third more - over 40GW of theoretical renewables - more if include low scale domestic generation - solar PV over c1.3m homes - say aver 4kWp arrays - 5GW.
And a similar level of large scale conventional if include large scale biomass (e.g. Drax) at c5GW  gas theroretical c28GW, nuclear c6GW.

The green ideal is all renewables.

The reality is a mix - weighted heavily to the more conventional -in the frequent periods when the current c30GW of wind delivers sub 20% of its theoretical  capacity - summer and winter alike.

The reality on a dull windless day and especially night as GW of grid level solar being auctioned - night - 90% plus conventional.

Essentially heading towards 2x typical current demand in all but coldest winter days at theoretical capacity.

And with some pushing road maps into 100s GW of renewables  as transition away from gch and ice vehicles.

Bearing in mind the need to cope with weeks / months of low output from wind and solar.  As low as sub 5% from wind (c1.3 GW from c30GW installed in one half hour slot)  on one of the coldest days last winter iirc.

When renewables can generate so little that means we still need pretty much the full demand capacity in conventional.


That's why it's only ever a second system - until far more storage added at a huge cost.  Winds delivery in GW - averages and highs tgat some push as great progress -dont actually keep the lights on and industry working.  To do that the system as is has to cope with the lows by maintaining the conventional capacity.

Unless we further "bankrupt" the nation and impoverish  households building the storage capacity - in TWh.  Far in excess of current capacity,  approved plans like Coire Glas and so costs.

(As others continue to build fossil plants to support their growing demand and economies - China, India  etc  
https://www.carbonbrief.org/china-responsible-for-95-of-new-coal-power-construction-in-2023-report-says/
)

(For balance Around 22GW the 1/2 hr slot high reported late 23 from current c30GW wind.  That 20GW variation - around half UK current typical demand.)

And that overcapacity and that duplication of capacity comes with a cost - a real cost - that arguably decades of greenwashing has attempted to hide from us.

BarelySentientAI

Scot_39 said:

MacPingu1986 said:

Scot - the 2015 CfD auction was small in comparison to the later CfD auctions - only a small % of renewable capacity under CfD contracts are at those early CfD prices - which are only "high" compared to the low price of renewables generally, they still comparable pretty favourably to the prices needed for traditional fossil fuels and nuclear plants to operate.

I'm not sure what you mean about two generation systems being run in parallel? The UK doesn't have this - we have an integrated generation system where (almost) all generators of different technology types feed into the grid. There is capacity on standby but this has *always* been the case including before renewables, nuclear plants and conventional plants trip off, need maintenance, have unplanned outages, demand fluctuates etc..., so the grid has always had a volume of backup and peaker plants to operate when needed. Renewables do create some of a greater need for this, but much less than you would think, which is more than offset by their wider benefits, whether economic or environmental. Grid connections are needed whether the generating site is renewable or not, and network capacity is being upgraded to reduce issues of curtailment.

Bills are higher than pre-crisis levels primarily as a result of the continued higher wholesale price of gas against pre crisis levels, not because of increased renewable capacity.  

And yet CfD is having a real and significant impact on the wholesale price we now pay -   increased to £37 in £613 wholesale costs  in July cap  - but in reality CfD only impacts electric -  of the order of 10%.  So over 2p/ kWh. 

https://www.ofgem.gov.uk/sites/default/files/2024-05/Summary of changes to energy price cap 1 July to 30 September 2024.pdf

For an energy supply we simply cannot rely on given its huge output variability.

Not to mention network costs of connecting to it and stabilising the grid and its regulation for it as capacity grows in future. Network costs as of Apr up £98 in 5 years from c£300 to c£400.

When - if all the 2019, 2022 round capacity - is installed we will have over third more - over 40GW of theoretical renewables - more if include low scale domestic generation - solar PV over c1.3m homes - say aver 4kWp arrays - 5GW.
And a similar level of large scale conventional if include large scale biomass (e.g. Drax) at c5GW  gas theroretical c28GW, nuclear c6GW.

The green ideal is all renewables.

The reality is a mix - weighted heavily to the more conventional -in the frequent periods when the current c30GW of wind delivers sub 20% of its theoretical  capacity - summer and winter alike.

The reality on a dull windless day and especially night as GW of grid level solar being auctioned - night - 90% plus conventional.

Essentially heading towards 2x typical current demand in all but coldest winter days at theoretical capacity.

And with some pushing road maps into 100s GW of renewables  as transition away from gch and ice vehicles.

Bearing in mind the need to cope with weeks / months of low output from wind and solar.  As low as sub 5% from wind (c1.3 GW from c30GW installed in one half hour slot)  on one of the coldest days last winter iirc.

When renewables can generate so little that means we still need pretty much the full demand capacity in conventional.


That's why it's only ever a second system - until far more storage added at a huge cost.  Winds delivery in GW - averages and highs tgat some push as great progress -dont actually keep the lights on and industry working.  To do that the system as is has to cope with the lows by maintaining the conventional capacity.

Unless we further "bankrupt" the nation and impoverish  households building the storage capacity - in TWh.  Far in excess of current capacity,  approved plans like Coire Glas and so costs.

(As others continue to build fossil plants to support their growing demand and economies - China, India  etc  
https://www.carbonbrief.org/china-responsible-for-95-of-new-coal-power-construction-in-2023-report-says/
)

(For balance Around 22GW the 1/2 hr slot high reported late 23 from current c30GW wind.  That 20GW variation - around half UK current typical demand.)

And that overcapacity and that duplication of capacity comes with a cost - a real cost - that arguably decades of greenwashing has attempted to hide from us.

In the 1990s, you would have been right.

Fortunately, we have had 30 years to work out how the system can be managed and balanced without just saying "let's have 100% conventional backup" - which we don't really even have at the moment.

Scot_39

But just to prove low wind output not unique

Current wind output 1.38GW at grid iamkate 4.4% of 31.8 GW demand.

From 30GW plus theoretical rated capicity.

Gas Coal nuclear and biomass = 19.2 GW, 60.5% demand

Luckily solar is active pushing renewables up with its 5.x GW c16.6% share - but it wouldn't be at night - if wind stays low - conventional nearer 75-80%

Hydro sub 1% - pump storage charging (just).

Norway interconnect 1.4 GW -  lets say mainly hydro ?

Other interconnects net add 14.5% demand - might suspect the 9.5% from Fra is mainly conventional - (60-70% typically nuclear sub 15% renewables , c15%+ hydro , just sub 10% fossil in recent past years )..

Others ?