The volatility in wholesale power prices due to exposure to global gas prices has demonstrated the need to diversify and decarbonise the UK’s domestic energy system. The Association for Renewable Energy and Clean Technology (REA) has called for a faster transition to renewables to counter the challenges seen in the energy market over the past few weeks in particular. “It’s an extraordinary time in the market,” said Good Energy’s chief executive Nigel Pocklington. “The risky approach so many new entrants have taken, pricing below cost, is now coming home to roost. Unfortunately the impacts will be felt by both customers and the more prudent suppliers in the market.” In response to this period of volatility, energy secretary Kwasi Kwarteng similarly highlighted the need for an increasing in renewables to reduce the risk of volatile power prices. Additionally, he called crisis talks with suppliers and industry bodies to discuss the impact of the current high gas prices.
Current 21st Sept 2021 read more »
Industry experts warn that without government intervention, gas prices will remain at current levels and UK household energy prices will need to rise by more than £ 550 a year. The UK price cap, which limits the average annual gas and electricity bill to £ 1,277 starting next month, should be raised to £ 1,834 if households will cover the full cost of purchasing consumables today for the next 12 months. Calculated by industry consultant EnAppSys for the FT, this figure reveals the pressure the government is facing to protect consumers from energy shortages. “Living expenses” crisis. Executive Secretary Kwasi Kwarteng has eliminated calls from some companies in the industry to lift price caps. They believe this distorts market signals and contributes to the expected collapse of as many as 40 small retail energy suppliers this winter.
FT 21st Sept 2021 read more »
UK ministers explore ways to cut soaring energy bills for poorest households. Ministers are considering ways to cut energy bills for the poorest households amid soaring gas prices as analysis suggests a typical low-income UK family will be £1,750 worse off by next April. On Tuesday Boris Johnson brushed away worries about a wider cost of living squeeze and shortages this winter, saying “Christmas is on”. But government sources said there were concerns, with discussions already under way about whether to extend or raise existing discounts on energy bills available to those on the lowest incomes, with prices set to rise by an average of 12-13% – or £139 a year – from October. Experts predict even higher rises of potentially more than £150 again in the spring, when the government’s energy price cap is reviewed, unless there is a sustained fall in the cost of gas, which surged by more than 70% in August alone.
Guardian 22nd Sept 2021 read more »
Don’t worry, it’ll all blow over; nothing to see here. That seems to be the Government’s stance on more or less everything these days, and has been very much the message from Business Secretary Kwasi Kwarteng this week on the energy crisis. On one level, he’s sort of right. There is indeed little chance of the lights going out, or domestic boilers being denied their fuel. As for the millions of customers whose suppliers are going bust, Ofgem, the regulator, has a well established mechanism for ensuring that they won’t be left with no power or gas at all. Instead, alternative suppliers will be force marched into taking them on. I’ve written before about the madness of allowing the closure of the Rough gas storage facility off the East coast, and expecting the private sector to find and develop alternative storage capacity. This was never going to happen without government intervention, and it duly hasn’t. The crisis has exposed deep flaws in Britain’s “seat of the pants” energy market, together with a basic lack of preparedness and resilience. Senior industry sources have been warning for years that the market was vulnerable to any rapid increase in prices, but were ignored. Sorry for the cliché, but what we are seeing today was an entirely avoidable accident waiting to happen. Problem number one is the proliferation of undercapitalised “fly by night” suppliers. This was deliberately encouraged by ministers as a way of promoting as much competition as possible, and therefore seemingly guaranteeing the lowest possible prices. Consumers were urged to shop around for the best deals, regardless of the credit worthiness of the suppliers involved.
Telegraph 22nd Sept 2021 read more »
Of course the big energy firms want to dismantle the price cap – it’s just proving its worth. Inflation is soaring, furlough is ending and Universal Credit is being cut, the Government can’t ditch the energy price cap now.
Telegraph 22nd Sept 2021 read more »
China and Russia will determine Britain’s winter fate. Government’s careless failure to heed warning signs leaves the UK at the mercy of the Kremlin and the weather to avert an energy disaster. The British Government was so focused on Brexit early last year that it missed the early warning signs on Covid-19. It has since been so focused on the pandemic that it missed a potential breakdown in the normal structure of the European and global gas market. Boris Johnson is now looking straight down the barrel of an energy supply crunch with national security implications. As we reported over the weekend, there are serious fears of industrial collapse over the winter and the sort of trauma experienced by this country during the three-day working week in the 1970s. It is sobering to remember that UK gas consumption is currently running at just 155 million cubic meters per day in this mild late-summer season (ICIS data). The average winter peak is 385 mcm/d. The stress test has hardly begun. A one gigawatt nuclear reactor in Scotland is due to close at the end of the year. The UK faces this energy crisis with no national strategic storage of gas in reserve. It was not Mr Johnson who oversaw the closure of the main reserve at Rough off the Yorkshire coast but it was a Tory policy and it is he who will face the political consequences. China is the world’s biggest importer of gas. Its LNG imports rose 23pc over the first eight months of this year, with an August surge to cover air conditioning and a shortfall in Chinese hydropower due to drought. What is suddenly changing is that China itself is choking at these prices and is – for other reasons – trying to break its addiction to steel and cement. “We could see a situation where China starts to dump LNG on the European market. If it happens soon enough over the next month, we’ll all be saved again from our own total incompetence,” said Professor Alan Riley, an energy expert at the Atlantic Council.
Telegraph 21st Sept 2021 read more »
Energy crisis: Warning of higher bills next year as Scottish Government urged to ‘act now’ to decarbonise homes. The global gas crisis is predicted to see a second record hike in energy bills next spring, driving millions across the UK into fuel poverty.
Scotsman 22nd Sept 2021 read more »