High Electricity Prices

decouple/unlink electricity price from gas

In June, then Prime Minister Boris Johnson called the system “ludicrous” in an interview with the BBC, and in July Ofgem announced it was eyeing a range of reforms to help accelerate the green energy transition in Britain, including decoupling the wholesale gas and power prices.
Now chancellor Kwasi Kwarteng also stated that consumer bills still being set by marginal gas prices is a “problem that needs to be addressed,” when speaking at the Aurora Spring Forum in July in his role as business and energy secretary.
https://www.current-news.co.uk/government-sets-out-plans-to-decouple-power-and-gas-prices-in-new-energy-prices-bill/

Only 119 people signed
https://petition.parliament.uk/petitions/621874

UK Gov working to ‘break link’ between renewables and gas prices Sep 2022
https://www.energyvoice.com/renewables-energy-transition/443062/uk-gov-working-to-break-link-between-renewables-and-gas-prices/

the Coalition’s response urged the Government to unlink the cost of energy from gas: Oct 2022
https://www.endfuelpoverty.org.uk/electricity-markets-must-be-fairly-priced-for-consumers/

Portugal expects deal to disconnect power prices from gas prices 'very soon' Apr 2022
https://www.reuters.com/business/energy/portugal-expects-deal-disconnect-power-prices-gas-prices-very-soon-2022-04-20/

Jan 2024. “It is a difficult statistic for policy makers to absorb that electric freight train haulage in the three months to September declined compared to two years ago, from 17.59 million  km. then to 11.10 million km. this year. Quite simply, it is cheaper to use diesel traction given the current level of charges for electricity traction. (Source:- The Railway Magazine.) Jan 2024

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Why does the price of gas drive electricity prices, including renewables?
https://www.goodenergy.co.uk/blog/why-does-the-price-of-gas-drive-electricity-prices/

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Currently we pay four times more for electricity partly generated from climate friendly renewables than fossil fuel derived gas per kWh.
This favours running fossil gas central heating burners with efficiencies far less than half that of heat pumps.

We calculate both doubling gas prices whilst halving electricity £/kWh or even making both equal would result in running costs favouring less efficient Air-to-Water Heat Pumps over fossil gas burning.

"electricity prices are currently set at the price of the marginal generator, which at present is gas. The Government has promised to address this issue & to investigate how to decouple electricity prices from gas prices, in its Review of Electricity Market Arrangements (REMA) launched in July 2022"

There was nothing in Sunak's speech, read out by Charles on 7th Nov 2023, about incentivising eco friendly domestic heating by reducing cost of electricity & raising fossil fuel costs.

Can ordinary MPs (at least those without vested interests) band together & demand energy prices & subsidies favour the far more efficient Air source heat pumps & especially the more efficient Air-to-Air types suitable for many properties.

GR

https://publications.parliament.uk/pa/cm5803/cmselect/cmenvaud/109/report.html

https://post.parliament.uk/research-briefings/post-pn-0694/

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https://www.businessjuice.co.uk/energy-guides/what-makes-up-your-electricity-price/

https://x.com/PrEuXr/status/1716014150151811078?

£7500 grant
https://www.gbnews.com/money/heat-pump-grant-installation-gas-boiler

Case 1
GAS 0.069 £/kWh COP=0.9 Annual Cost 1749 £/year FAVOURS fossil gas burning
Elec 0.2843 £/kWh COP=2 Annual Cost 3243 £/year

Case 2
GAS*2 0.138 £/kWh COP=0.9 Annual Cost 3498 £/year
Elec/2 0.14215 £/kWh COP=2 Annual Cost 1621 £/year FAVOURS clean Heat Pumps

Case 3
GAS equal price 0.2843 £/kWh COP=0.9 Annual Cost 7206 £/year
Elec equal price 0.2843 £/kWh COP=2 Annual Cost 3243 £/year FAVOURS clean Heat Pumps

First case is present situation with part renewable Electricity approx 4 times more costly than fossil derived gas.
2nd case is as proposed; Increase gas price and use the income to reduce electricity by same proportion - to be phased in gradually.
3rd case, as your post (not sure why ;-?), increasing cost (£/kWh) of gas to match electricity
Both 2nd and 3rd case FAVOURS clean Heat Pumps as present government MP's policy and greatly assists obtaining XR second demand.
https://extinctionrebellion.uk/the-truth/demands/

Box 1 The link between wholesale gas prices and retail electricity prices.
"High wholesale gas prices have driven high electricity prices because electricity prices are currently set at the price of the marginal generator, which at present is gas. The Government has promised to address this issue" 05 Jan 2023
https://publications.parliament.uk/pa/cm5803/cmselect/cmenvaud/109/report.html

High wholesale gas prices have driven high electricity prices because electricity prices are currently set at the price of the marginal generator, which at present is gas.
p24* The Government has promised to address this issue, and to investigate how to decouple electricity prices from gas prices, in its Review of Electricity Market Arrangements (REMA). The review was launched in July 2022
https://publications.parliament.uk/pa/cm5803/cmselect/cmenvaud/109/report.html

Electricity pricing
Currently the wholesale electricity price is determined by the cost of the most expensive unit of generation procured. As gas power plants are usually the most expensive generators, this effectively means that the price of gas generation sets the market price for all generators, including those who have much lower cost bases, such as offshore windfarms.
https://sustainablefutures.linklaters.com/post/102ianu/government-response-to-the-review-of-electricity-market-arrangements-consultation
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p194* £10 bn/year subsidising Fossil Fuels.

(* Dale Vince, Manifesto)

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