Rather than subsidising consumers, the government should subsidise the price of gas burned by power stations. Being the most significant form of electricity generation, gas fired power generators set the benchmark for wholesale electricity prices, whatever its source. Gas power, which accounts for less than 40% of the market therefore sets an artificially high price for solar, wind and nuclear, which are then accused of making excess profits.
Article from 2015 when the Government decided to scrap the zero carbon homes plan. How much better off the owners of new houses built since 2015 would be now, if all of them had been built with greener forms of energy.
Not too far from where I currently live there is an enormous housing development called City Fields. It’s a 375 hectare space with developments by all the usual housing builders including Redrow, Miller, Bellway, Avant. Some phases are built and have people living in them and others are still under construction. I pass by it when I’m going to work and it occurred to me that I can’t see one house anywhere that’s got solar panels fitted. Not one. That’s not to say there are not some somewhere but I’m betting if there are, which I doubt if I’m honest there are not many. This development has over 1000 homes and I think it’s a disgrace that newly built homes are not being made to be constructed with at least solar energy. This crisis has reached boiling point but the need for new developments to have built in solar should have been mandatory for at least five years.
This is because new build properties have to meet certain SAP ratings in energy efficiency. If they can get away with it the big developers wont put renewables in. They build down to a price not to a specification. In Wales any new development can now only be built if the have heat pumps and solar
I posted a Twitter link earlier this morning but have found a better link which is easier to read for everyone. It discusses how energy prices are set in this country and I have never heard it mentioned anywhere else and it would appear that the big energy providers have a vested interest in it remaining out of the public domain. I have copied the parts of the article which are the most enlightening, as I think more people deserve to know just how much we are being ripped off in this country, however there are caveats so reading the whole article would be better.
It’s important to remember that the goal of energy regulation in the UK is to preserve the privatised energy ‘market’, whatever else is claimed. In essence, everything it does is meant to ensure that at least some of the companies engaged in this ‘market’ do not fail.
The way it sets energy prices reflects this. There are lots of ways to generate electricity in the UK. Renewables, nuclear, coal, hydro and gas all play a part. Most are used, except coal, which is now only in emergency use.
The cost of generating electricity using these various methods varies greatly. For example, using gas at current spot market prices costs about £611 per megawatt hour (MWh) right now. Other sources cost about £60/MWh for nuclear, £50/MWh hydro and in the range £50 to £140/MWh for on and offshore wind and PV. Those are big differences.
The electricity we actually get delivered to our houses is from a mix of all these sources. It is total nonsense, for example, that anyone supplies pure renewable electricity. All electricity from all generating sources is mixed together when it goes down the wires to our houses.
Bizarrely, however, that’s not how the price is set. The wholesale price of electricity in the UK is set on what is called a ‘marginal costing’ basis. This is much beloved of economists but is working against the interests of all consumers of fuel right now.
What it means is that the wholesale energy price is set so that the most expensive producer can make a profit from the sales they make into the wholesale energy market.
So, since gas-produced electricity is the most expensive to produce right now (and is likely to be so for a long time to come) its cost of manufacture plus a fair profit margin sets the wholesale price for all electricity right now, however it is generated.
What that means is that those producing electricity from gas can still make a profit and so stay in business at present. But what it also means is that the nuclear, hydro and renewables producers are being paid the price that the gas generators get.
This makes no sense at all. For example, there is no ‘marginal cost of production’ for wind and solar power: the wind and sun are free. In those cases a marginal costing is simply the wrong one to use.
That is also true of nuclear power, where the cost of production is based on the capital cost of the plant spread over its useful life. Again, a marginal costing basis for pricing makes no sense when the amount of variable input into the nuclear process is tiny.
The result is obvious: the profit in the nuclear and renewable producing companies, who usually make more than half of UK electricity, increase dramatically, and wholly unnecessarily when a marginal costing price setting model is used to suit gas generators of electricity.
Rather than subsidising consumers, the government should subsidise the price of gas burned by power stations. Being the most significant form of electricity generation, gas fired power generators set the benchmark for wholesale electricity prices, whatever its source. Gas power, which accounts for less than 40% of the market therefore sets an artificially high price for solar, wind and nuclear, which are then accused of making excess profits.
This is what is so ridiculous about the whole situation. It was something I wasn't aware of until I read the article I recently posted above.
What is really concerning is that with energy costs set to be capped at £3549 in October. What’s going to happen to those on prepayment meters. Those of us on direct debits have the projected annual cost spread out over the entire year. That’s bad enough but those on prepay are unable to smooth their payments over the summer and winter months and are therefore going to get absolutely whacked during December - March when even the most hardy will need the heating on for long periods. That’s likely to mean bills for the four monthly period to be up there at £600 - £700 per month perhaps £135 per week or around £20 per day. How on earth are those already struggling with their bills for food going to cope ?
What is really concerning is that with energy costs set to be capped at £3549 in October. What’s going to happen to those on prepayment meters. Those of us on direct debits have the projected annual cost spread out over the entire year. That’s bad enough but those on prepay are unable to smooth their payments over the summer and winter months and are therefore going to get absolutely whacked during December - March when even the most hardy will need the heating on for long periods. That’s likely to mean bills for the four monthly period to be up there at £600 - £700 per month perhaps £135 per week or around £20 per day. How on earth are
those already struggling with their bills for food going to cope ?
Pre pay customers are also going to be the least we'll off section of society and more often than not live in properties with inefficient boilers and crappy insulation. It's a perfect storm.
I've heard on the news that 60% of Conservative voters favour nationalisation of utilities. This survey says that well over 60% support nationalisation in the UK generally (i.e. not just Tories):
I've heard on the news that 60% of Conservative voters favour nationalisation of utilities. This survey says that well over 60% support nationalisation in the UK generally (i.e. not just Tories):
Obviously, the Tories will never agree to this, but why aren't the Labour Party getting behind it? For them it's a vote winner surely?
Because they don’t need to get behind very much at all at this point. There’s still two years until the next chance for them to be vote winners. A week is a long time in politics. Two years is an eternity.
Article from 2015 when the Government decided to scrap the zero carbon homes plan. How much better off the owners of new houses built since 2015 would be now, if all of them had been built with greener forms of energy.
Not too far from where I currently live there is an enormous housing development called City Fields. It’s a 375 hectare space with developments by all the usual housing builders including Redrow, Miller, Bellway, Avant. Some phases are built and have people living in them and others are still under construction. I pass by it when I’m going to work and it occurred to me that I can’t see one house anywhere that’s got solar panels fitted. Not one. That’s not to say there are not some somewhere but I’m betting if there are, which I doubt if I’m honest there are not many. This development has over 1000 homes and I think it’s a disgrace that newly built homes are not being made to be constructed with at least solar energy. This crisis has reached boiling point but the need for new developments to have built in solar should have been mandatory for at least five years.
Absolutely. If you look at YouTube at van conversions where more and more people are doing ‘stealth’ living off grid, nearly all of them install modest solar panels. Every single new build should have some kind of solar energy conduit, surely that is a no brainer?
I’m guessing that adding solar panals adds to the constructors cost but adds little or nothing in the price of the completed house 🤷🏻♂️
I mentioned the potential 'statutory obligation' to build houses complete with solar panels months ago .. a while back I visited the site of a major development close to my house .. the salesman I spoke to said that if someone was buying a drum off plan and specified solar panels, they could be fitted at a 'small extra cost', no sum was specified, it would depend on size etc. He further opined that not everyone would want panels and that customers enquiring about them were few and far between .. his opinion which is what I thought he would say, is that everyone can make their minds up about panels after they move in .. this might well change in the near future of course .. a t m his potential buyers can choose from all electric, electric/mains gas or electric/Calor gas .. no mention of heat pumps or the more exotic new wave water/space heaters
Another development close to me started I'd say 8 months after the previously mentioned is of 38 3/4/5 bed properties. At present I'd estimate 12 are already lived in with a further 10 almost completed awaiting the finishing touch and the rest still under construction. Of the 12 'inhabited', I counted 4 with solar panels, couldn't see all around the site though .. so things could be on the move in sunny N E Lincs
I've heard on the news that 60% of Conservative voters favour nationalisation of utilities. This survey says that well over 60% support nationalisation in the UK generally (i.e. not just Tories):
Obviously, the Tories will never agree to this, but why aren't the Labour Party getting behind it? For them it's a vote winner surely?
Good post. Thanks. Yes, why aren't Labour getting behind nationalisation? Scrapping clause 4 was such a big deal that they can't be seen to be going back on it?
Solar tiles are now a thing, right? They can literally harvest sun energy from roof tiles and generate electricity...
Such things are so obvious as necessary adjustments to how we build homes. Question is, why isn't there legislation?
My Aunt bought a new build about ten years ago in Tonbridge. It was someone who sold off some of their garden, the builder put 4 houses on there and part of the planning approval was that they had to have Solar installed.
Does seem logical to make it part of the planning process for new builds.
Solar tiles are now a thing, right? They can literally harvest sun energy from roof tiles and generate electricity...
Such things are so obvious as necessary adjustments to how we build homes. Question is, why isn't there legislation?
My Aunt bought a new build about ten years ago in Tonbridge. It was someone who sold off some of their garden, the builder put 4 houses on there and part of the planning approval was that they had to have Solar installed.
Does seem logical to make it part of the planning process for new builds.
I don’t think profit margins for house builders are as great as some might imagine. In that respect they won’t install all things Green unless it’s a planning condition.
Don’t underestimate the financial cost and risk house builders carry until a property is sold and contracts exchanged. In a rising interest rate environment profit margin for builders is squeezed even more.
Government need to substantially subsidise green initiatives on new builds and also all existing home improvements. Sadly for home improvements like insulation companies will exploit that and not to the advantage of consumers.
Rather than be dragged kicking and screaming by planners and the government, perhaps some of these developers should be showing us the way and be adding green initiatives as a standard.
3 London boroughs no longer taking applications for electricity - ie a new development wanting an electrical supply I’ll have to wait 5-10 years as they have run out -all in west London where they have built a load of power hungry data centres - another example of a complete lack of governance in thus country
talking to a friend of mine yesterday .. she reckons the pandemic lockdowns were and the current energy supply crises are all cunningly disguised international government cartel measures aimed at controlling global warming .. could she be onto something ?
3 London boroughs no longer taking applications for electricity - ie a new development wanting an electrical supply I’ll have to wait 5-10 years as they have run out -all in west London where they have built a load of power hungry data centres - another example of a complete lack of governance in thus country
also, there is a worry that electricity supply cables, some that have been in situ since the grid's formation in the 1930's (!) are not strong enough to meet current high demands without losing a lot of their transmission power through overheating with the possibility of burn outs and power blackouts .. just a few more things to worry about and lose sleep over
talking to a friend of mine yesterday .. she reckons the pandemic lockdowns were and the current energy supply crises are all cunningly disguised international government cartel measures aimed at controlling global warming .. could she be onto something ?
talking to a friend of mine yesterday .. she reckons the pandemic lockdowns were and the current energy supply crises are all cunningly disguised international government cartel measures aimed at controlling global warming .. could she be onto something ?
She might be on something, but she isn’t on to something.
Is it worth investing in solar panels when all you get is 8p per unit.
It's the money you save on not paying for your own electricity usage that's the return on investment.
Which is why batteries are important so you can store it for yourself rather than sell it at a ridiculous cheap rate, especially if you aren't home during the day when most solar is achieved.
We haven’t all got £5000 to invest in solar panels. But my point is why should we invest in them for the already greedy energy companies to make even more money out of us.
We haven’t all got £5000 to invest in solar panels. But my point is why should we invest in them for the already greedy energy companies to make even more money out of us.
From what I'm learning, if the system is well designed and includes batteries you won't send huge amounts back to the grid anyway.
I don't believe it's the energy companies that sets the tariff anyway, so although they may do well out of it, it's not of their doing as such.
The investment is predominantly to reduce your own bills.
Comments
https://www.taxresearch.org.uk/Blog/2022/08/29/we-could-massively-reduce-the-price-of-energy-in-the-uk-by-changing-the-way-we-regulate-energy-prices/
It’s important to remember that the goal of energy regulation in the UK is to preserve the privatised energy ‘market’, whatever else is claimed. In essence, everything it does is meant to ensure that at least some of the companies engaged in this ‘market’ do not fail.
The way it sets energy prices reflects this. There are lots of ways to generate electricity in the UK. Renewables, nuclear, coal, hydro and gas all play a part. Most are used, except coal, which is now only in emergency use.
The cost of generating electricity using these various methods varies greatly. For example, using gas at current spot market prices costs about £611 per megawatt hour (MWh) right now. Other sources cost about £60/MWh for nuclear, £50/MWh hydro and in the range £50 to £140/MWh for on and offshore wind and PV. Those are big differences.
The electricity we actually get delivered to our houses is from a mix of all these sources. It is total nonsense, for example, that anyone supplies pure renewable electricity. All electricity from all generating sources is mixed together when it goes down the wires to our houses.
Bizarrely, however, that’s not how the price is set. The wholesale price of electricity in the UK is set on what is called a ‘marginal costing’ basis. This is much beloved of economists but is working against the interests of all consumers of fuel right now.
What it means is that the wholesale energy price is set so that the most expensive producer can make a profit from the sales they make into the wholesale energy market.
So, since gas-produced electricity is the most expensive to produce right now (and is likely to be so for a long time to come) its cost of manufacture plus a fair profit margin sets the wholesale price for all electricity right now, however it is generated.
What that means is that those producing electricity from gas can still make a profit and so stay in business at present. But what it also means is that the nuclear, hydro and renewables producers are being paid the price that the gas generators get.
This makes no sense at all. For example, there is no ‘marginal cost of production’ for wind and solar power: the wind and sun are free. In those cases a marginal costing is simply the wrong one to use.
That is also true of nuclear power, where the cost of production is based on the capital cost of the plant spread over its useful life. Again, a marginal costing basis for pricing makes no sense when the amount of variable input into the nuclear process is tiny.
The result is obvious: the profit in the nuclear and renewable producing companies, who usually make more than half of UK electricity, increase dramatically, and wholly unnecessarily when a marginal costing price setting model is used to suit gas generators of electricity.
https://weownit.org.uk/blog/biggest-ever-poll-shows-huge-support-nationalisation
Obviously, the Tories will never agree to this, but why aren't the Labour Party getting behind it? For them it's a vote winner surely?
a while back I visited the site of a major development close to my house .. the salesman I spoke to said that if someone was buying a drum off plan and specified solar panels, they could be fitted at a 'small extra cost', no sum was specified, it would depend on size etc.
He further opined that not everyone would want panels and that customers enquiring about them were few and far between .. his opinion which is what I thought he would say, is that everyone can make their minds up about panels after they move in .. this might well change in the near future of course .. a t m his potential buyers can choose from all electric, electric/mains gas or electric/Calor gas .. no mention of heat pumps or the more exotic new wave water/space heaters
Another development close to me started I'd say 8 months after the previously mentioned is of 38 3/4/5 bed properties. At present I'd estimate 12 are already lived in with a further 10 almost completed awaiting the finishing touch and the rest still under construction.
Of the 12 'inhabited', I counted 4 with solar panels, couldn't see all around the site though .. so things could be on the move in sunny N E Lincs
Either way, nationalise!!!!
Such things are so obvious as necessary adjustments to how we build homes. Question is, why isn't there legislation?
Does seem logical to make it part of the planning process for new builds.
https://www.business-live.co.uk/economic-development/redrow-record-strong-first-half-23063399
No
I don't believe it's the energy companies that sets the tariff anyway, so although they may do well out of it, it's not of their doing as such.
The investment is predominantly to reduce your own bills.