Europe faces an unusual problem: ultra-cheap energy - https://web.archive.org/web/20240620151949/https://www.economist.com/finance-and-economics/2024/06/20/europe-faces-an-unusual-problem-ultra-cheap-energy
Europe faces an unusual problem: ultra-cheap energy - https://web.archive.org/web/20240620151949/https://www.economist.com/finance-and-economics/2024/06/20/europe-faces-an-unusual-problem-ultra-cheap-energy
You’re wrong. Different companies own different parts of infrastructure, power generation and/or distribution. The system is no different to setting up a grocery shop. Grocery shops don’t own farms (usually) or a building they’re operating in, yet they can compete efficiently with each other.
As for fibre, again - no issues here. Britain has OpenReach as the main infrastructure manager, which leases it to ISPs, plus there’s a selection of independent ISPs who have their own infrastructure.
And even trains can work successfully as proven by the EU.
So they have a monopoly on a given part of infrastructure. So if a transformer goes down, that company would need to come out and fix it? What happens if they don’t fix it promptly? Surely you can’t reroute your power lines through a transformer owned by a different company, no?
I don’t live in the UK, so I don’t know how it works. But I do know it’s impractical to have parallel electrical systems. We’ve done that historically with internet (cable, dsl, and fiber would use separate, parallel infra), and putting in a competing service gets stuck in bureaucracy because existing players don’t want competition, which is why many areas only have one or two ISPs (they block new ISPs from rolling out new infra with regulations and whatnot). So I’m guessing that’s not happening, which means there’s a monopoly at some point.
I could totally be wrong though. What I do know is that the UK has some of the most expensive electricity in the world.
Are you trolling or what?
No, why would you think that? Your response was basically, “you’re wrong, trust me bro,” and I tried to interpret what you said in a way that makes sense.
If you want to convince me that it works, I’ll need details.
I gave you a very simple example with a grocery shop. There’s not much difference between setting up a new shop or energy provider.
There’s a huge difference. You completely sidestepped the interesting bit, which is the monopoly on infrastructure (e.g. power lines in the city up to your residence). Someone owns and maintains those lines. That is the part I’m concerned about.
It’s easy to compete on energy production (e.g. farms) or customer service (e.g. grocery delivery), but it’s hard, if not impossible, to compete on infrastructure (e.g. the store itself). If there’s an energy shortage (i.e. store runs out of food), you can’t just go to another provider, they’re all using the same grid. The analogy would work if you’re assigned to a store, but you can choose the cashier, and perhaps cashiers are paid based on customers served. Or perhaps if prices are fixed across grocery stores and they somehow share inventory, but how they layout the store differs.
So it sounds a lot more similar to the municipal fiber initiatives in my area. Basically, there’s one network owned by the municipality, and companies provide “service” on that network, but any maintenance goes to the city-owned network to manage (e.g. the local monopoly). In pretty much every case, it’s a distinction without a difference, because they all just present the same underlying service with a different veneer. I don’t know if the UK has the same concept, but it’s also like an MVNO (a company offering mobile service on a major network’s hardware), but with even less variety in pricing (how many pricing tiers can you actually have for electricity?). I like my MVNO, but I get the same service quality regardless of the MVNO I select, provided they’re all backed by the same network.
I’m not sidestepping anything. When you’re opening a grocery shop, you don’t build a building for it, you’re not doing plumbing, you’re not supplying electricity to it. And you’re not doing logistics and don’t grow wheat. If there’s an issue with bread producers, you don’t get bread and you can’t do shit about it. There’s absolutely no difference between opening a shop and becoming an energy supplier.
Ok, I guess it makes a little sense if you’re looking at it from the business owner’s perspective, at least in terms of setting up a new business. But that applies to any form of retail.
But grocery stores provide value apart from just buying straight from their suppliers. They provide proximity so you can get products at any time. They provide a buffer so if one store runs out, you can go to another. They provide services, like doughnuts, cut fruit, and sliced meat. And so on.
Unless I’m mistaken, energy companies don’t provide anything like that. To the customer, they just provide customer support and a portal to accessing the same stuff as their competitors. There’s no difference between infrastructure and probably energy price, and that’s the interesting part about an energy company.
So what value are they providing?
Energy providers also provide additional value. For example, some energy providers provide only 100% renewable electricity, while most provide electricity from all sources. Some of them have night tariffs, some have EV specific tariffs with integration with your charging station. They also have different incentives for people who want to install solar panels. For example, some might pay a portion of your installation bill, while others might provide a preferential buy back rate.
Some of them also provide additional services to their clients, like switching your house from standard 230V 100A supply to 230V 300A supply (that’s how you get 22kW EV charging at home in the UK). The thing is that energy infrastructure in the UK is standardised, so any company with a correct licence can do upgrades.