UK's thirst for energy falls, yet prices rise: Now why is that?
To keep profits the same or better. Even if everyone in the UK cut their use in half, prices would still rise to cover the shortfall in profits. It's a scam.
UK's thirst for energy falls, yet prices rise: Now why is that?
British politicians are depleting the nation's ability to produce the energy it needs, according to state statistics. The annual DUKES survey has provided exhaustive statistics on the UK's energy production and consumption since 1948, and the latest figures have been published by DECC, the Department for Energy (and Climate …
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Monday 30th July 2012 13:47 GMT Anonymous Coward
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
Yin,
If demand were to go back up I doubt we'd see a reduction in prices... do you?
While I haven't seen the data, the assertion that margin (profit) has increased during this time seems to go against the assertion that the price increase is due to a fixed cost situation. I have also never heard it argued that overall energy rates are majority dominated by fixed cost concerns. AFAIK, the general thinking seems to be more dominated by input (fuel) costs. There is a fixed cost component, sure, but I don't think it is dominant nor able to explain what we're seeing.
If there was a spike in fuel costs during this time it could still fall under the "basic economics" category (i.e. if input costs increase more than demand drops relative to the elasticity for this particular relationship). I'm not aware of a spike in fuel costs that would explain this...
Seems to me that the price increases regardless of demand, and beyond that which could be explained by input or fixed costs... which seems to put us outside the realm of basic supply and demand economics. To really understand this, I think we would need to consider other factors like government policy (subsidies, carbon offsets) or noncompetitive behavior (i.e. price fixing).
In the states we have seen a massive drop in gas/petrol consumption vs. last year amid relatively stable input (oil) costs, and gas/petrol prices are still much higher than last year. That money is going somewhere... cui bono?
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Monday 30th July 2012 11:48 GMT Eddie Edwards
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
Higher prices -> less people prepared to pay -> lower demand.
Lower demand -> fixed costs are shared between fewer sales -> prices rise.
It doesn't get much more basic than that, although I suspect gas prices are controlled by more than basic economics.
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Monday 30th July 2012 11:49 GMT J.G.Harston
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
"Demand falls and prices rise is basic economics?
Where did you go to school at Yin?"
Happened every year at Taxi Fare Renewal Board.
Taxi Drivers: We not carrying as many passengers, so aren't making as much money, we want to put up fares.
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Monday 30th July 2012 12:22 GMT paulc
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
"Taxi Drivers: We not carrying as many passengers, so aren't making as much money, we want to put up fares."
though the economic model here was the train companies jacking their prices up every year and wondering why demand was falling...
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Monday 30th July 2012 13:10 GMT The BigYin
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
The train companies are isolated from the vagaries of demand, they just get the government (i.e. taxpayer) to cough up more to cover any loses (or "lower then predicted profits").
Demand for trains is relatively elastic despite the poor level of competition* as alternatives do exist (cycle, car, motorcycle, car, bus, car-share, taxi, foot; etc) and people will switch if they can.
Not so with energy. People might switch from one company to another, but the level of any reduction they can make is going to be slight unless they invest in insulation/more efficient equipment; so it remains easy to raise prices to cover the fixed costs without seeing much drop in demand. It's not as simple to just throw up a solar array and a wind generator as it is to change mode of transport. Thus demand for energy is relatively inelastic.
As I said - it's basic economics.
*Whether or not there should even be competition on the railways is a different question. In my opinion the experiment has failed and should be scrapped. It's not going to work in the NHS either - unless we are prepared to raise spending on health to the same levels as the USA (from ~8% to ~15%). Your MPs are working hard to impoverish you even more - but so longs as they get a fat directorship and the perks; they don't give a damn.
Cite: https://en.wikipedia.org/wiki/Health_care_in_the_United_States#Spending
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Monday 30th July 2012 13:47 GMT Anonymous Coward
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
Also, to me "basic economics" implies micro-101 type supply and demand... price fixing/collusion and/or government policy analysis is not - IMHO - basic economics.
I wouldn't have been as snarky to you Yin if you had mentioned your fixed cost angle - which I still disagree with BTW.
Cheers.
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Monday 30th July 2012 10:47 GMT Dr. Mouse
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
"It's not a scam, it's basic economics."
I thought that basic economics would say that if demand falls by more than supply (as a cursory glance at the figures suggests), prices would go down.
Ah, but that forgets that we have pretty much no competition, and the big suppliers effecively* fix prices.
*They may not get around a table and decide "We will all charge £x", but they certainly follow each other (If company X puts prices up, the rest follow pretty sharpish)
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Monday 30th July 2012 18:50 GMT Anonymous Coward
Re: UK's thirst for energy falls, yet prices rise: Now why is that?
It's not a scam, it's business.
My personal definition of "business": making the greatest possible amount of money, in return for the least possible effort, in the shortest possible time, with an acceptably low chance of doing jail time.
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Monday 30th July 2012 09:29 GMT Andrew Moore
"UK's thirst for energy falls, yet prices rise: Now why is that?"
Basic economy policy of 'what the market will bear'. If someone is prepared (or even happy) to pay £100 per month on electricity why shouldn't you continue charging them the same or even slightly higher while getting them to use less of your product.
And the great thing is, if the customer complains, just bleat on about how much power their standby devices are using (using incorrectly calculated research).
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Monday 30th July 2012 10:20 GMT Valerion
Re: "UK's thirst for energy falls, yet prices rise: Now why is that?"
It's not even what the market will bear. It's more: "This is what we're charging. Tough shit."
As all the companies increase their prices at about the same time, it's not like you can go elsewhere to get it cheaper. None of them are going to decide to cut prices by 50% because there's no reason for them to do so. They know we have to use it, so they keep increasing the prices and therefore their profits and we keep on paying the extra because we've got no choice.
Bastards. All of 'em.
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Monday 30th July 2012 18:39 GMT King Jack
Re: "UK's thirst for energy falls, yet prices rise: Now why is that?"
If you want to bring prices down, we the consumer need to do this: Select one power company and use the internet to encourage everyone to boycott it. As people leave to join the other suppliers that company WILL lower it's price. It will be sitting on fuel that it cannot sell. When that company is on the brink of bankruptcy, rinse and repeat with another one. When the big five or six realise that the customer has some power they won't all raise prices come the winter or they could be next.
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Monday 30th July 2012 10:20 GMT Anonymous Coward
Re: "UK's thirst for energy falls, yet prices rise: Now why is that?"
"Demand Side Management" is great (good for the environment) but it can only go so far. It's a bit like a company thinking about resolving a problem with profitability by banning people from travelling and ordering biscuits for meetings.
The problem we face is energy planning is not a 4 year parliamentary issue - cross party agreement is required for a 5-10 year plan. We need to buy ourselves time. Renewables are great but in their infancy, over time solar, wind and wave power will increase in efficiency and cost less to manufacture significantly. We're in a recession so energy demand is low and we are manufacturing less - we do face increase demands due to population growth.
We need to either invest in cleaner fossil fuels generation capacity or - dare I say it - nuclear. Nuclear would buy us perhaps 25 years if we invested in all the plants proposed. It's a bit like the early plans for the M25, hard to predict but if we get it very badly wrong the light might have to go out for period of time which we are not used to.
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Monday 30th July 2012 10:20 GMT Anonymous Coward
Once you get down to a certain level, consumption isn't optional, and it's not like people can go somewhere else. You're not going to let the pipes freeze in winter or stop going to work just because prices bumped up again, are you?
This is all, IMHO, one big game of regulatory capture. The government may really think they're helping Gaia/climate by bending their citizens over on energy prices, but either stupidity or malice the end result is the same... interested parties are lining their pockets at the public's expense.
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Monday 30th July 2012 10:20 GMT Anonymous Coward
Commercial market rules apply
If the state was in charge (i.e. prior to 1990) then the costs would be related to the cost of production. It is not. So market rules apply - charge what you can get away with - if you're charging too much, customers can move to an alternate supplier. Unless, of course, a cartel is in operation (it's remarkably difficult to prove this). Note cartels are fine if we're talking about petrol as OPEC operates as a cartel.
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Wednesday 1st August 2012 07:48 GMT Martin Budden
Re: Why trends don't predict the future
This confusion is exactly why I think we should dump the kWh unit and replace it with something else. I'd like to suggest we call the new unit the "cuppa", which is the amount of energy used to boil a cupful of water (like many things cup size is relevant (see icon), also relevant are ambient temperature, altitude etc, so let's peg it at 10 cuppas = 1 megajoule). Everyone is familiar with a cup of tea (or coffee) and how hot it is, so hopefully people will be able to relate the unit "cuppa" to the amount of energy it represents.
I notice that El Reg does not currently have a standard unit of energy (presumably relying on the somewhat clumsy Norris-linguine) and a cuppa would nicely fill the gap. Especially if accompanied by a biscuit or two. www.theregister.co.uk/Design/page/reg-standards-converter.html
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Monday 30th July 2012 09:30 GMT Anonymous Coward
Brinksmanship
For all it's positive contributions to the stewardship of this planet's resources (and there have been many, many positives) I take issue with the irresponsible brinksmanship of the green movement over energy generation.
The very clear evidence in publicly available records of energy generation that we cannot depend on renewables (ie. wind) for energy. The reason is that it is just too unreliable (the wind that is, not the hardware - though when was the last time you drove past a wind farm and didn't see a number of non-rotating units?). Even averaged nationally the wind is far too variable to be used as the majority energy source for the national grid.
For a dependable energy supply that doesn't involve CO2 emissions we have to go nuclear. If you're green and are true to your principles you have to accept this. All the fears and scaremongering about nuclear energy over the years has been shown to be unfounded. Not to say the track record is unblemished, far from it, but, in comparative terms, which has been the statistically safest way to generate energy over the past 60 years?
To ignore nuclear as an option for the majority energy source for the future is short-sighted brinksmanship. Greens, you want to preserve a world for future generations? Then start to live in the real one. Nuclear energy is your friend.
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Monday 30th July 2012 10:20 GMT mr_jrt
Re: Brinksmanship
Not strictly speaking true - there are plenty of options to pursue for storing excess energy when the renewable sources are available (i.e. the wind is blowing or the sun is shining) - hydroelectric (pumping water into a reservoir), molten salt, massive flywheel installations, etc.
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Monday 30th July 2012 10:59 GMT Richard 12
@mr_jrt
We'd need tens if not hundreds of GWh of storage - remember that flywheels and salt batteries are still fairly experimental and are really intended to provide the few minutes of UPS before the diesel generators kick in at sites like data centres and power stations.
So the only storage technology that could actually scale far enough is pumped storage hydroelectric.
Yet oddly enough, the Scottish seem unwilling to let us drown most of Scotland to provide the capacity.
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Monday 30th July 2012 10:46 GMT Magister
Re: Brinksmanship
Whilst I would say that Wind is not the only renewable, your basic assumption is correct; none of the renewable options will provide a steady supply in sufficient quantity at this time - I wish that they would, but all the wishing in the world won't make it happen.
Successive governments (and their civil servants) have taken the nimby view; we don't care where the power is generated, just as long as it's not here. The problem is that this has had a bad effect on the balance of payments because we have to pay for all that oil & gas (or electricity) that we import.
Britain as a country is rich in coal; yet now we produce so little that we have to import the stuff. As a result, we are buying crap from Eastern Europe that is a bugger to work with because the quality is so poor.
With regard to nucear power, there are options; but almost no research has been put into developing fusion technology. Thorium reactors could provide a sensible approach to replacing the older fast breeder technology and we have enough of the basic material in the UK to provide energy for hundreds of millenia; the Chinese have now started working on this, but our elected leaders won't even discuss the principle.
There will come a time when the lights start to go out because the country is just not generating enough power. Short sighted? Totally myopic.
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Monday 30th July 2012 12:20 GMT Anonymous Coward
Re: Brinksmanship
"To ignore nuclear as an option for the majority energy source for the future is short-sighted brinksmanship. Greens, you want to preserve a world for future generations? Then start to live in the real one. Nuclear energy is your friend."
So so true. Sadly the idiocy of the green movement stop at nuclear - they can't even agree amongst themselves about renewables. One lot say build wind turbines , another lot say no , they kill birds , destroy habitats. One lot say burn biosmass , another lot says that destroys habitats too.
As far as renewables are concerned tidal power is 100% reliable and would meet a substatial portion of the UKs energy budget but the greens killed that too - check out the severn barrage.
Oh , and they don't like underwater turbines - might hurt some fish. FFS , its enough to make you weap.
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Monday 30th July 2012 12:21 GMT Aldous
Re: Brinksmanship
yes but then they would have to admit that the 60 plus years of protesting anything nuclear was wrong. look at the article with the cofounder of green piece (the one they kicked out) a while back who basically said build nukes, plant tree's and burn them.
nuclear lobby needs to stop going on about thorium, sure it has potential but nuclear is bad enough for nimby and "think of the children" factor without adding on "new unproven technology". just refine existing designs and continue with the research then build out thorium when its proven reliable (i.e mini reactors by US gov etc).
Will never happen though after all gov has been telling everyone to be green can't u turn on this old chap so lets throw money down the toilet
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Monday 30th July 2012 12:21 GMT h4rm0ny
Re: Brinksmanship
"If you're green and are true to your principles you have to accept this."
Many, many of us are. Unfortunately an aging Old Guard have a lock on most of the environmental organizations. It's why I'm not a member of groups like Friends of the Earth. I actually would be if they focused on positive environmental issues such as preventing deforestation of the rain forests (care about CO2 or not, it's an environmental tragedy for all sorts of other reasons). But you can't be a member of these groups if you are pro-nuclear. You wont be listened to by the people who manage all the campaigns and press-releases, they simply will not hear you. They are people (specifically referring to the FoE leadership now) who will knowingly distort figures and omit data so that people 'reach the right conclusions'.
The only place for nuclear-minded environmentalists to go is single-issue groups or campaigns. For example, I'm part of some wildlife conservation movements. But even there it's hard to contribute without suddenly finding cross-polination from FoE or similar has infected the group. Next thing you know, you're watching it spout rubbish about Fukishima and wondering why you ever bothered to get involved.
And this is a big shame because we need public pressure in order to keep the environment something that is a factor in our country's decisions. But any environmental pressure suddenly finds a bunch of dishonest life-style environmentalists swooping in to speak on behalf of it and turn it to their own aims.
Fuck Friends of the Earth's leadership! Plenty of people who care in that organization being lied to and misled and even more being dissuaded from calling themselves environmentalists because of the anit-intellectualism of those fossils. We need to care about the environment. And the absolute best thing we could do right now is start moving our energy base to nuclear.
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Monday 30th July 2012 13:47 GMT James Micallef
Re: Brinksmanship
Agree 100% that medium-term (50 to 100-year) bulk supply of reliable energy requires nuclear as renewables still need improving + capacity-building and fossil fuels get scarcer. But, to be completely honest, since this article is about cost, it has to be acknowledged that nuclear power is expensive. Not unreasonable expensive, but certainly more than fossil fuels, and energy prices will go up long-term . Tough shit, that's the way the cookie crumbles, I doubt there will ever be a time when energy is as cheap as it is now, when we (humanity as a whole) are living off the 'inheritance' of millions of year of captured sunlight converted into oil/coal/gas (and blowing through that inheritance at an impressive rate)
The world needs to build up a global non-fossil supply of about 20-25 TW within the next century or else it's going to be one hell of a hangover when the party's over
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Monday 30th July 2012 14:57 GMT Mark 65
Re: Brinksmanship
"Wind and hydro remain a minuscule part of the energy supply, at under one per cent. If the renewable energy sector has a star, it's bioenergy - capturing gas from landfill and waste combustion."
I don't agree. We simply don't have enough wind farms. Build more. Cover the countryside. Sod green-belt, this is green. Now where did I put that taxpayer subsidy cheque? Must have left it in the East wing of the weekend house.
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Monday 30th July 2012 10:20 GMT Anonymous Coward
Seriously
wish that ofcom or some other body would start regulating the price on energy. In the modern era its a required commodity. Year on year british gas and other energy suppliers are registering record profits while at the same time increasing their prices. It's just absurd.
There should be a cap on the amount these companies are charging for gas and electric. I mean for goodness sake, everything in thsi bloody country is too expensive now. The area I live in, with my monthly wage, if I were to move out of my parents house (yes I still live with my parents) on my current wage (which is good for my area) of 20k I get around 1.2k per month
Rent for a 1 room studio apartment is about £450. Add bills, and the other basics I need to y'know... live and by the end of the month I have absolutely no disposable income.
The country wonders why nobody is buying anything anymore? How about because we can't afford it, because anyone earning less than a maanger is bled dry through bills rent and taxes,
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Monday 30th July 2012 10:20 GMT Dodgy Geezer
In the 1950s....
When nuclear power was just beginning, it was suggested that in the future energy would be provided, like water, to houses in such quantities that it would be:
'... too cheap to measure...'
and it would just be paid for with a fixed connection fee, like water.
There is NO technical reason why this should not be the case. In the case of water, there is no reason at all to introduce water meters, since there is in effect an infinite supply, because water moves in a cycle and can never be used up. The cost of production for both water and energy, depending on economies of scale, can be reduced to practically nothing per head, with the only costs being maintenance and, for energy, fuel.
What has gone wrong with this vision is the privatisation process. It is NOT to the advantage of a company to produce its output for free. Instead, all sorts of arguments are used to keep the unit cost as high as possible, because profit is a percentage of unit cost.
We should get back to 1950s thinking....
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Monday 30th July 2012 10:59 GMT Anonymous Coward
Re: In the 1950s....
Too right,
Me and the wife just moved into a new house, it's a fairly large house but there is only two of use and we have new "efficient" appliances. However the water company says we have to pay £38.00 per month for 12 months before they will review how much water we actually use!
Now, in the last house witht the old appliances we didnt need to pay 1/2 of that (to the same supply company), seems to me that the companies want to charge you a loadso they can have your surplus cash x x number of customers in their accounts earning them interest?
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Monday 30th July 2012 11:00 GMT Richard 12
Re: In the 1950s....
Actually, your domestic water supply uses energy to purify it, and you could argue that they are effectively the same thing.
At the end of the day, all your domestic services (Electricity/gas, water, sewerage, broadband, phone) come down to energy, maintenance and capital infrastructure costs.
Such a shame that the first is being squeezed by short-term thinking... As is the second and third...
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Monday 30th July 2012 11:48 GMT I'm Brian and so's my wife
Re: In the 1950s....
> ... there is in effect an infinite supply, because water moves in a cycle and can never be used up
Are you serious? You may be technically correct on the first part, but there were points at which demand outstripped supply and we then started hammering the reservoirs. What would happen when the reservoirs run dry? Would you stick by your assertion that it can never be used up?
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Monday 30th July 2012 12:41 GMT HMB
Re: In the 1950s....
With Nuclear we have a Policy of "if at first you don't succeed, try, try and then give up".
It may just be a matter of time before those people's comments about Nuclear (it being too cheap to meter) may still come true.
Current Nuclear plants aren't vastly more sophisticated than the ones created in the 50s. If computers had advanced at the pace of Nuclear Power we'd still be using punch cards in our biggest most powerful computers, forget the personal computer entirely.
Check out Terrapower if you want to catch a glimpse of something that might be real progress.
In the end, e=mc^2 trumps everything. Just ask the sun.
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Monday 30th July 2012 13:48 GMT Don Jefe
Re: Time to invest in micro generation then?
It's not the upfront expense that dooms micro-generation; it is local legislation that requires you to "sell" your power to the local utility then get a credit on your monthly bill. Until you can live in a township and generate your own electricity and use it directly then micro-generation is doomed.
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Wednesday 1st August 2012 07:58 GMT Richard 12
Two thing - fractional distillation and crackers. Look them up.
The oil that comes out of the ground is a mix of many different types of oil, petroleum and impurities, so one of the big jobs after extraction is separating the stuff out.
Even after doing that, it's also relatively easy to crack heavy oils into lighter oils like petroleum if that's what you want.
These are what refineries are for.
Light oils into heavier ones is more difficult but can also be done.
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Monday 30th July 2012 10:20 GMT mark 63
"The decline in domestic production capacity is illustrated by this chart:"
That chart is labelled "annual Growth rate" - a useless figure to put on a graph and just distorts the figures, often used in the housing market.
we need "Production capacity" , not "Production Capacity growth rate" - that would be evident from the production capcity graph
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Monday 30th July 2012 10:46 GMT DaWolf
In Orlowski's world
8.6 million tonnes of oil equivalent is miniscule.
I call it a start. Yes, it needs to be higher. Yes, it can get higher. Yes, it needs supporting, and pushing, and developing more.
But in Orlowski's world, it's virtually nothing, and this means we shouldn't do anything to develop it further.
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Monday 30th July 2012 11:49 GMT Richard 12
Re: In Orlowski's world
In the real world it is miniscule.
It also won't get any higher until our politicians stop pandering to the idiot Greenies and start doing some joined-up and medium to long-term thinking as opposed to the current extremely short-termist, market and headline-driven approach.
Swapping a small amount of CO2 emissions for mercury and heavy metals pollution is not sane, and cutting CO2 by deliberately blacking out and pricing out consumers is also rather crazy. That's before you note that CO2 emissions per kWh are likely to increase by pushing wind as more gas turbines are needed sit in hot standby ready to sync.
The National Grid has repeatedly warned that our current path leads straight to rolling blackouts ("demand management") and various charities have already pointed out that the number of people in fuel poverty is increasing - as a direct result of this push to wind and solar.
The next ten to fifteen years are going to be extremely painful, and somebody in power is going to feel a sharp red-hot poker within that time period - but it won't have been their fault, because the ones who set us on this course will have quit before the faecal/fan interface occurs.
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Monday 30th July 2012 12:21 GMT Richard 12
Re: The root cause of all of this mess?
Not true, in this case it's actually Blair and the Green Party.
The coal mines were going to close either way simply down to safety concerns - we care if our people die down't pit so the costs escalate and countries who pay less attention to the odd mining disaster rapidly become much cheaper.
The problem we have here is the over-emphasis on wind and the outright refusal to build any nuclear plants in the last decade. Thankfully now that some Greens have realised that nuclear is the only carbon-neutral baseload generation, as we've got a chance of starting to build the plants we needed years ago.
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Monday 30th July 2012 11:00 GMT Refugee from Windows
More concerned with the reduction of the supply side
Forget the "dash for gas", but a fair proportion of our electricity generation plant is getting long in the tooth and there's no real plan to replace it from the suppliers. Could be a new industry doing domestic UPS systems for the future power cuts. The drop in demand will nicely mask the reduction of capacity until we have a nice cold spell, cloudy and little wind, and then the lights will start to go out.
Fireplace - heating system of the future!
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Monday 30th July 2012 13:48 GMT Don Jefe
Re: More concerned with the reduction of the supply side
There is a plan from the suppliers. When the system fails they will ask for govt funds to build new infrastructure and everybody wins. The heads of the suppliers will make a ton of cash and the pols look like hero's because they "saved our way of life". Yay!
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Monday 30th July 2012 11:49 GMT Nev
Have they started...
... preparing the UK public to accept the inevitable brown-outs that the (lack of a coherent) energy policy will bring?
Surely big generating cos want to keep supplies restricted to keep prices high?
As seen by the (illegal) shenanigans of ENRON and the resulting Californian power crisis.
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Monday 30th July 2012 12:22 GMT AndrueC
In this case demand and cost are caused by different factors (though they have some things in common). This means that just because one changes doesn't mean the other has to follow suit. I'll also point out that just because the price didn't fall doesn't mean that it wasn't affected. Things are rarely that black and white. Perhaps the price just didn't rise as far as it might have.
I have always disliked the kind of simplistic view where something either makes a problem go away or else it's a failure. Sometimes when you're bailing out a sinking boat the best you can do is delay the sinking.
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Monday 30th July 2012 12:35 GMT Anonymous Coward
Brown Out Blair Out Cameron Out
"Have they started preparing the UK public to accept the inevitable brown-outs that the (lack of a coherent) energy policy will bring?"
They've started preparing the public for the installation of smart meters with an OFF switch.
Some folks claim the OFF switch will not be used for load shedding.
Some folks believe in fairies.
I just think there won't be anything like enough smart meters to make a meaningful difference.
I also think that brown outs (reduced voltage) won't have the effect they once had, because there are significantly fewer resistive loads, and many of those that are resistive have thermostats, so the energy use won't decrease even if the voltage goes down.
So it'll be back to the three day week, with no power at all for part of the time.
That's what happens when you leave medium term planning to "market forces".
Fortunately LED torches are pretty good these days.
"more gas turbines are needed sit in hot standby ready to sync."
Bollocks. Utter bollocks. But frequently repeated utter bollocks. Please familiarise yourself with the concept of the hierarchy of reserve, which goes vaguely like
1) Hydro-electric (including pumped storage)
Responds within a few seconds, but there's not much of it
2) CCGT
Lots of GW of it, aircraft engines with steam boilers to maximise efficiency via waste heat recovery. Quick to start, although maximum efficiency does take longer.
2) Fossil-fueled traditional steam on hot standby (coal, oil, gas)
Running the boilers at or near operating temperature, but not generating. Takes minutes to start generating.
3) Fossil-fueled traditional steam on cold standby (coal, oil, gas)
Boilers cold. Takes hours to start generating.
Nuclear and wind are both irrelevant in this part of the picture. Nuclear too slow to respond, wind not guaranteed to be available when needed.
See also interruptible contracts and "load shedding".
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Wednesday 1st August 2012 07:59 GMT Richard 12
Re: Brown Out Blair Out Cameron Out
Our hydro is "STOR" (surge) demand - the typical example is a cup of tea in commercial breaks.
The "interruptible" contracts you're thinking of are probably the frequency response loads which can shut down instantly for up to 20 minutes (freezers and the like.) They exist to keep the Grid itself up and running while STOR starts up (75-360 seconds). They aren't there to get the peaking generators running.
CCGTs take a lot longer than you think to reach max. output - 40-50 minutes when 'hot', 75-110 minutes from 'warm' and 75 to 150 minutes from 'cold'*, although they can generate about 2/3 capacity within 30 minutes if you really go for it (treat them as a gas turbine). This is seriously fast for a fossil fuel system, the only faster ones are open cycle gas/petroleum turbine and conventional diesel generators which are used for UPS and grid STOR.**
The CCGTs are currently intended as "peaking" generators - peak demand is predictable so they are brought to temperature just in time to meet the peak demand at full efficiency.
You are right that at the moment we don't need to keep the gas running because wind and solar penetration is very low, and fully coverable by our existing STOR for long enough to get enough high-efficiency CCGTs going.
If current wind peneratration plans come to pass then frequency response plus STOR isn't going to be big enough for long enough to warm up CCGTs from cold.
So that leaves us building a lot more STOR diesels & turbojets and keeping more of the CCGTs warm and hot - both increase CO2 emissions.
Even now it is unclear whether we're actually reducing CO2 emissions when balancing the extra CO2 from the low-efficiency fossil-fuel STOR etc against the lower CO2 emissions of wind***.
Reading their recent publications it's clear that National Grid are shitting bricks. (Very diplomatically, but still...)
* Kehlhofer, R., et al., Combined-cycle gas & steam turbine power plants. 1999, Tulsa: PennWell Publishing Company.
** Boyce, M.P., Gas Turbine Engineering Handbook. 2006, Oxford: Elsevier.
*** Wind is not carbon neutral as it needs a lot of expensive maintenance, offshoire wind doubly so as it takes a lot of fuel oil to get out to the turbines.
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Monday 30th July 2012 12:37 GMT Fred Flintstone
Well, that's what you get for trusting a government..
This was predictable from the word "go" when you had governments talk about consuming less, because there is a very basic conflict of interest here: governments depend on the revenue of energy sales. The less you consume, the less they get to waste, so it was inevitable that prices would rise as reward for your diligent saving.
I find it absolutely amazing that so few seem to realise that the massive profits of oil companies are actually dwarfed by what governments earn on every erg of energy sold, yet nobody strikes for that. When the petrol strike happened, it must have produced much boardroom mirth that the *government* came to ask for lower prices. I'm sure the oil companies must have struck a massive deal to let government remain out of the picture on that.
I'm not saying that we all have to switch to Hummers now to get prices back - just realise that all the eco stuff can turn into self-harm if governments are not kept from ripping you off more.
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Monday 30th July 2012 14:58 GMT John A Blackley
Don't forget
in all your conversations about the price of utilities, to factor in politicians' favours done for their friends in the hopes that, when they (politicians) are caught accepting cash for questions, their friends will give them a few juicy directorships.
Also keep in mind that Britain's woeful decline in energy production capacity has been (mis)managed by those same politicians for decades - thereby assisting their various brothers-in-law and cousins to make millions out of 'renewable' energy.
These also are factors in the 'cost' of energy.
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Monday 30th July 2012 18:36 GMT gaz 7
Energy prices should be investigated
Energy costs going up is not the issue. It's the retail price increases compared to the fluctuations in the base price which is the concern, and the way the big companies are fleecing us dry making massive profits.
A fair profit is one thing, the profit increases we have seen from the likes of Centrica (British Gas) over the last few years is verging on scam or criminality, certainly immoral!
I think there are only 5 or 6 companies supplying virtually the whole UK market so competition is about as fierce as a dead sheep.
They're all robbing greedy bastards!
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Monday 30th July 2012 18:43 GMT Cameron Colley
We were told this in a story on El Reg.
It was too long ago for me to recall when but there was an article stating that energy companies needed more money from customers for less power "due to an ailing infrastructure". It was pretty much stated that household bills will rise, and significantly, whilst household consumption must go down. So the energy companies did tell us they were going to fuck us over.
Then there are smart meters whose objective is to make the consumer use less energy so that prices per unit can be put up.
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Monday 30th July 2012 18:51 GMT Anonymous Coward
You need the right frame of reference...
Many of the comments here betray an understandable assumption that a market is operating in energy. Wrong! The only reasonably fair, unrestricted markets we have are those that trade in unimportant things like pianos and second-hand books.
Wherever there are vast amounts of cash to be made, fingers (and indeed mountain ranges) are carefully laid in the scales.
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Monday 30th July 2012 21:26 GMT johnwerneken
price will be up regardless
If more production is to be had, prices will probably rise to recover capital costs. If fuels are to be used, in many cases scarcity increases or more expensive methods are required, either would raise prices. Further, if use of electricity were to DROP drastically, the plant cost would still need to me paid, and prices would rise. Finally, if the public through the government gets involved, whatever is done will add to costs, if we are lucky only the costs of the government acting, and not also the costs of the affects of that action.
IF both the value of money and the usage were stable, then prices likely would be as well, but I would not hold my breath.
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Monday 30th July 2012 22:00 GMT SJRulez
The typical british way
Were not selling enough, put up the prices to cover the gap, we sell even less, business no longer viable.
Were not making enough, put up the prices, demand drops were making too many, business no longer viable
And the gov constantly reinforce this stupid mindset.......
Business are closing, put up the taxes, more business close.
Not enough jobs, more people need benefits, put up the taxes, more businesses close, less jobs.
Cigarettes, less people are smoking, we need the money put the tax up.
Beer, people aren't spending out, we need the money, sting the supermarket shoppers.
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Tuesday 31st July 2012 15:24 GMT Ascylto
23456
"The owner of British Gas has come under fire for paying chief executive Sam Laidlaw about £4.4m in salary, shares and benefits last year, despite flat profits and rising consumer energy tariffs" (Telegraph)
Someone has to pay poor Sam his salary (or is it remuneration), otherwise, how could he pay his gas bill?
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Wednesday 1st August 2012 10:04 GMT Anonymous Coward
You ask why it is, it is the simple law of supply & demand. If demand goes up then buyers are willing to pay more for what hey want so unscrupulous sellers take advantage by profiteering. If demand goes down then the seller's bottom line is threatened so the price has to go up to maintain profits. That said it will probably be marketed as new & improved energy complete with cut price smart meter to allow control of your supply for your convenience.
This topic is closed for new posts.
Biting the hand that feeds IT
