UK’s uniform pricing is intended to ensure renewables are artificially profitable, incentivising more production. In most other countries, suppliers charge competitive rates, and brokers buy on an open market. This allows demand-based generators (like gas) to charge more during high demand periods (when wind isn’t blowing and sun isn’t shining). The flip side of this is that prices crater during high wind and sun periods. This leads to volatility which can be smoothed with futures contracts. The net effect is that renewables become less profitable, but consumers pay a lot less for electricity.
The UK needs to restructure their energy market to better align with the rest of Europe. It would significantly reduce prices for everyone.
While I agree that energy-intensive businesses should always be pushed onto flexible-pricing contracts, as a private consumer, uniform pricing is an advantage imo. You don’t need to think about whether running the washing machine will cost you 0.2¤ or 0.6¤ or whether there’s a price surge, and it’s even more expensive.
Keeping renewables a good investment also has its merits, in terms of hopefully higher buildout speed. Albeit, the most cash-focused investors aren’t necessarily the kinds of high-minded people you’d want on those projects; which in turn may create public anger at e.g. new wind farms. And in purely monetary terms, this is also primarily benefitting the rich at the expense of the poor.
While I agree that energy-intensive business should always be pushed onto flexible-pricinv contracts, as a private consumer, uniform pricing is an advantage imo. You don’t need to think about whether running the washing machine will cost you 0.2¤ or 0.6¤ or whether there’s a price surge, and it’s even more expensive.
Fixed pricing happens in Europe too. The retailer prices the volatility into a fixed pricing plan. It still ends up much cheaper than how the UK has structured their grid, which ensures electricity companies are making massive piles of money.
UK’s uniform pricing is intended to ensure renewables are artificially profitable, incentivising more production. In most other countries, suppliers charge competitive rates, and brokers buy on an open market. This allows demand-based generators (like gas) to charge more during high demand periods (when wind isn’t blowing and sun isn’t shining). The flip side of this is that prices crater during high wind and sun periods. This leads to volatility which can be smoothed with futures contracts. The net effect is that renewables become less profitable, but consumers pay a lot less for electricity.
The UK needs to restructure their energy market to better align with the rest of Europe. It would significantly reduce prices for everyone.
Britain looked at this and concluded: Brexit
While I agree that energy-intensive businesses should always be pushed onto flexible-pricing contracts, as a private consumer, uniform pricing is an advantage imo. You don’t need to think about whether running the washing machine will cost you 0.2¤ or 0.6¤ or whether there’s a price surge, and it’s even more expensive.
Keeping renewables a good investment also has its merits, in terms of hopefully higher buildout speed. Albeit, the most cash-focused investors aren’t necessarily the kinds of high-minded people you’d want on those projects; which in turn may create public anger at e.g. new wind farms. And in purely monetary terms, this is also primarily benefitting the rich at the expense of the poor.
Fixed pricing happens in Europe too. The retailer prices the volatility into a fixed pricing plan. It still ends up much cheaper than how the UK has structured their grid, which ensures electricity companies are making massive piles of money.
Thanks! I noticed I don’t know how it works in the UK. Is there a good article explaining it?