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> Britain paying highest electricity prices in the world for second year running > Ed Miliband’s net zero targets are facing fresh scrutiny after Britain was f

• ghighi7878 6mo ago
  Yes. But these things can be orthogonal. Or actually brcause gas is expensive. https://www.bbc.com/news/articles/crkep1vx3mro https://www.bbc.com/news/articles/crkep1vx3mro The price for wholesale electricity is set by a bidding process, with each generating company saying what it would be willing to accept to produce a unit of electricity. Once built, the cost of generating power from renewables is very low, so these typically come in with the cheapest bid. Nuclear might come next. Gas generators often have the highest costs, because they have to buy gas to burn, as well as paying a "carbon price" - a charge for emissions. The wholesale cost is set by the last unit of electricity needed to meet demand from consumers. This means that even if gas only generates 1% of power at a given time, gas will still set the wholesale price.
  • eliben 6mo ago
    California is a great example; highest electricity prices in the US (not counting Hawaii, which makes sense) despite significant hydro and fantastic solar capacity. In the last few years California runs 100% renewable on many days (and growing) every year. Economics 101: prices are not set by what goods cost to create + markup. Prices are set by how much people are willing to pay.
    • gentooflux 6mo ago
      Why is it "people are willing to pay" and not "corporations are brazen enough to charge"? These utilities are necessities and relatively few people have access to cheaper alternatives to them.
      • vovavili 6mo ago
        Because, under usual circumstances, self-interested corporations compete against each other to get as close to what people are willing to pay for energy as possible.
        • cap11235 6mo ago
          > compete against each other Citation needed.
          • vovavili 6mo ago
            https://lmgt.org/?q=econ+101 https://lmgt.org/?q=econ+101
            • tzs 6mo ago
              There’s a reason most universities don’t hand you a bachelors degree in economics as soon as you complete EC101. You should look into EC102 and the rest of the curriculum.
      • beejiu 6mo ago
        The regulations mandate that the market operates that way. It's the government that should be held to account.
      • bronson 6mo ago
        Because PG&E is a for-profit company. They are supposed to charge what the market will bear.
  • hvb2 6mo ago
    I've read this before and I don't understand how this doesn't become/is untenable. Doesn't this mean that solar/wind are insanely lucrative? Also, this would mean that in order to really bring the price down, gas needs to be taken out as a source. But gas is typically the source that balances the grid because its output can be changed quickly. So price wise, you might get a drop but you would lose your ability to react quickly to fluctuations in demand
    • scratcheee 6mo ago
      Yes, and I think that’s actually intentional, they’re rewarding renewables way over the odds without needing to give politically controversial benefits. The rewards are just an inherent result of the existing system. This is why renewables are growing rapidly in the uk. Of course we’ll need a way to resolve fluctuations both rapid and slower. Rapid fluctuations are handled by pumped hydro and increasingly by batteries. The slow fluctuations (day/night all the way to summer/winter and good/bad weather patterns) are much trickier, I think it’s still unclear how well handle them, but it will certainly be partly handled by having an excess of renewables, though we’ll likely need some other solutions too, nuclear is probably one of them.
      • pydry 6mo ago
        The irony is that your comment should be entirely inverted. Renewables are not rewarded way over the odds - in fact the ruling party banned onshore wind entirely and i remember them banning at least one offshore wind farm. Luckily it is very cheap to build. Now Hinkley Point C is another story. It's a hugely expensive boondoggle which is taking decades to construct at enormous cost and the reward at the end is that they are rewarded with a strike price that is 3x that of solar and wind. That is an obsecene subsidy forced on to customers for a power source that cant even do load following and doesnt help with fluctuations in supply and demand. The slow fluctuations on cold, windless nights or when nuke plants are down for unplanned maintenance are going to be managed with gas. Maybe one day it'll be gas synthesized with electricity from solar+wind overproduction on a day like today. The roundtrip is expensive, but will still be cheaper than nuclear power on a windy, summer day.
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  • elcritch 6mo ago
    Renewables may be the cheapest at spot values, but there needs to be a way to price in the intermittent nature of the power.
    • deleted 6mo ago
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    • pydry 6mo ago
      There is. The cost of my electricity changes every half hour.
    • ViewTrick1002 6mo ago
      People disliking renewables always say this. Then when asked what method to price in the Swedish nuclear fleet having ~50% of capacity offline multiple times last year and France famously having 50% of the capacity offline during the energy crisis I always get crickets for answers. It’s apparently fine when nuclear plants doesn’t deliver, but not renewables. The difference with renewables is that it’s even easier to manage. Their intermittency is entirely expected and the law of large numbers ensure we never have half the capacity offline due to technical issues at the same time.
  • traceroute66 6mo ago
    > Or actually brcause gas is expensive. Gas in the UK is expensive because the Tories spent decades selling off the storage so developers could turn them into real estate. This continued well into the 2000's when, for example the lettuce (Truss) closed the Rough storage facility in 2017. Gas in the UK is expensive because of 1980's privitisation. Another one of the Tory's great ideas. The UK privitisation model is designed to generate profit. Norway made a different choice. Equinor is majority state-owned, and Norwegian extraction operates within a framework designed to capture resource rents for public benefit. Britain privatised its way out of that option decades ago in the Thatcher-era and has never seriously revisited it. Analysis from the University of Oxford[1] found that maximising oil and gas extraction from the North Sea would only save households £16 to £82 per year – and this would rely on tax revenues collected being distributed to households to offset their energy bills. Dr Anupam Sen, co-author of the analysis, said the idea that “draining” the North Sea would make the UK more energy secure and significantly cut household bills is “sheer fantasy”. “We show that regardless of the remaining lifetime of North Sea oil and gas, a ‘drill baby drill’ approach to extraction would actually cost households more money versus continuing on our path to clean energy.” The authors stress that savings gained from the clean energy transition are recurring annual reductions in bills which would continue indefinitely, whereas North Sea oil and gas are finite resources that would run out around 2040. [1] https://www.smithschool.ox.ac.uk/news/drill-baby-drill-approach-north-sea-would-cost-households-more-fully-renewable-uk-finds-oxford https://www.smithschool.ox.ac.uk/news/drill-baby-drill-appro...
    • RobinL 6mo ago
      Why would additional storage make a significant difference to the price of gas?
      • nicoburns 6mo ago
        Presumably because the price is a volatile, and storage gives you more flexibility around when you buy.
        • traceroute66 6mo ago
  • jordand 6mo ago
    Yeah I'm in the UK and for electricity, I'm on the green Octopus Agile tariff, which tracks the wholesale price updating every 30 mins. Given the abundant green energy today, and peak times between 3-7pm, right this second I'm paying £0.02/kWh, but at 6pm, I'll be charged £0.40/kWh. In the coming months with gas supply reduced, and consumer demand steady, it will have a knock on impact to me given it tracks wholesale cost so I'll have to consider moving off the tariff given I'll be paying more overall.
  • krona 6mo ago
    > The price for wholesale electricity is set by a bidding process, with each generating company saying what it would be willing to accept to produce a unit of electricity. Without mentioning how Contracts for Difference (CfD) works, this is a slightly disingenuous oversimplification.
  • qxmat 6mo ago
    This is absolutely correct. HN readers can learn more about the merit order and marginal pricing here: https://www.next-kraftwerke.com/knowledge/what-does-merit-order-mean https://www.next-kraftwerke.com/knowledge/what-does-merit-or... You can read more about gas markets in the Global Gas Market guide by A115 here: https://a115.co.uk/global-gas-market/ https://a115.co.uk/global-gas-market/ (you can download the PDF guide at the bottom without giving any information)
  • collinmcnulty 6mo ago
    Which, importantly, drives more renewables and storage development because it makes the renewables fantastically profitable to run: near zero cost for you, but paid the price set by gas.
  • roenxi 6mo ago
    They aren't orthogonal - the reason that gas is being used is because renewable can't reliably power the grid! If you look at something like https://grid.iamkate.com/ https://grid.iamkate.com/ you can see that in the last 24 hours the gas peak is when the wind dies down and the sun isn't shining, around 6-8pm. Happens to be a real price peak at that time. This isn't some weird and unexpected outcome, we've had at least a decade of evidence with this sort of low-wholesale-high-retail price dynamic. That isn't gas is expensive, it is simply policy that the UK, rather naively, is trying to run their grid 24/7 based on processes that are not available 24/7. That is an expensive trick to try and pull off. Poor people need a way to signal that they won't use electricity in the evening if they want to be able to afford power is my read on the situation. Not very civilised but if that is how the UK approaches reliable cheap energy as a target then it seems the most reasonable outcome.
    • trollbridge 6mo ago
      Seems like a very good case to get storage and power backup in people's homes. Industrial users could install their own gas fired generators. Residential consumers could have simple battery based backup, or even a generator which would double for helping during powerouts.
      • roenxi 6mo ago
        Bigger question is why they haven't already - these trends have been in place for a very long time and this current phase of the UK energy crisis has been on display for years. Anything legal and cost effective would have been done by now if the market had anything to say about it. Which suggests something odd is afoot. Maybe storage is more expensive than gas, maybe the UK government has regulated the option out of existence. Maybe something else.
        • energy123 6mo ago
          Probably because it doesn't make economic sense to install storage prior to renewables being so substantial that you start having to curtail.
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  • shafyy 6mo ago
    Well explained, thank you! This is called the marginal price. Many people are not aware of this and are then think renewables are expensive.
• rurounijones 6mo ago
  Electricity pricing in the UK is dictated largely by the price of Gas. This is a good video that goes into it: https://www.youtube.com/watch?v=IEnFmrgEbWo https://www.youtube.com/watch?v=IEnFmrgEbWo
  • krona 6mo ago
    Gas is the yang to winds yin. What other dispatchable power source is there that Britain could use? Whatever the dispatchable power source, it would have to last weeks at a time in the coldest months of the year.
    • rurounijones 6mo ago
      The issue is that if my electricity I am using now is 99% renewable and 1% gas then I am paying as if 100% is gas. That is why prices are so high. The video goes into much better detail but the keyword if you want to search yourself is "marginal cost pricing. You can still have dispatchable gas without this pricing structure.
      • eigenspace 6mo ago
        You can have dispatchable gas without that pricing structure, but having a grid without that pricing structure can't really function without major nationalization of power generation. Marginal pricing is one of those things that at first sounds crazy, but when you delve into the topic, it's the only sensible way to have market pricing on electricity generation. The only real alternative would be a fully nationalized grid where the government buys up all the dispatachable power sources.
        • stavros 6mo ago
          Do you have anything I can read on why marginal pricing is the only sensible way to have pricing? EDIT: Ah, apparently it aligns market forces well, by making cheap energy sources massively profitable to run, so more and more get added. Perversely, though, it seems to me that it also incentivizes an entire renewable grid to not expand to 100%, so they all enjoy a much higher price.
• BoredPositron 6mo ago
  [flagged]
• energy123 6mo ago
  Are you arguing causality? Texas generates significant renewables, and has low electricity prices.
• internet2000 6mo ago
  I'm sure there's an (un)healthy dose of degrowth to let them hit that 90% number too.
  • swarnie 6mo ago
    Economic rocket fuel lands in Dover most mornings, it'll balance out. - Ed Miliband 2026 (probably)
• sega_sai 6mo ago
  This is Telegraph for you. The cost of electricity is not driven by green levies or net zero targets, but by gas prices, as gas is a backstop when all other sources are exhausted. Therefore electricity prices are pretty much tied to gas.
  • ph4rsikal 6mo ago
    Obviously, Electricity is a National Security issue. It's naive to state that the problem is gas prices. Germany is seeing Steel, Automotive, and other hard science companies leave for that very reason. The strategy should have been to build an energy architecture that reduces prices while being robust against force majeure events.
  • 0xy 6mo ago
    Renewables inherently require gas peakers.
• dietr1ch 6mo ago
  Footing the technology development bills as a developed country should. Britain owes the world a lot in terms of fossil fuel contamination too.
• benrutter 6mo ago
  This is of course linked to the UKs renewable rollout (and to do with detaips around the UKs energy markets leading to gas dictating the price for noe), but completely misses the fact that the UKs spending isn't just spending but investment. Will be interesting to see in five years time looks like, we could well see a scenario where the UK has abundant cheap electricity being exported to the rest of Europe. Will be interesting to hear what the sceptics holding some American states fossil fuel based grids up as examples think then. None of this of couse factors in the fact that fossil fuels cannot be sustained if we want a livable planet. Factoring that in, payimg energy bills three times as high would be a good investment, if it protects the world we depend on, in my book at least.
  • ZeroGravitas 6mo ago
    Ember has predictions of future EU cross border electricity flows in 2030 and 2040 and it shows the UK becoming a net exporter: https://ember-energy.org/data/europe-electricity-interconnection-data-tool/ https://ember-energy.org/data/europe-electricity-interconnec...
• 4ndrewl 6mo ago
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• ZeroGravitas 6mo ago
  > Ed Milliband's net zero targets... These net zero targets were actually introduced by the right wing Conservative party in 2019 under Teresa May and passed with broad support across parties. Now the same party has collapsed in support (for reasons unrelated to this target, which remains broadly popular with voters) and attacks the targets they introduced.