Because entrenched business interests are trying to extract more profit from a shrinking market pool.
The article is UK specific.
Renewables are cheap and getting cheaper, they make up and increasing percentage of our electricity, so why are electric bills rising?
Regions without domestic gas supplies or which have depleted most of their gas reserves in recent decades get a lot of their gas by importing it. Countries are now competing hard for gas reserves, which raises the costs.
Gas makes up less than 40% of electricity production. Wind, which dominates in the UK, isn’t even the cheapest renewable. Yet it still only costs 5 pence per kilowatt hour. The intermittency of it only adds another 1 pence per kilowatt hour. Yet, the average electric bills in the UK stand around 20 pence/kwh. That’s around 4 times the cost.
The design of electricity systems has failed to catch up with the revolution in renewable energy. Competitive electricity markets, established in many countries to try and minimise costs, are actually suffering the greatest price rises. This is not because governments elsewhere use taxes to subsidise electricity (though some do), but **because in wholesale electricity markets, the most expensive generator sets the price**.
Since renewables and nuclear will always run when they can, it is fossil fuels – and at present, unequivocally gas, plus the cost of taxes on CO₂ pollution – which set the price almost all the time, because some gas plants are needed most of the time, and they won’t operate unless the electricity price is high enough to cover their operating cost. It’s a bit like having to pay the peak-period price for every train journey you take.
The gap between cheap renewables and expensive final electricity is becoming unconscionable.
What would electricity markets appropriate for renewable energy look like? The author proposes a **green power pool** which would aggregate long-term contracts with renewable energy generators and sell the power on to consumers. The price would mainly be set by the actual investment costs of generators, rather than gas-driven wholesale markets.
When there isn’t enough renewable power being generated or stored – like on cold and calm winter days – the green power pool would buy electricity from the wholesale market for limited periods and quantities. To minimise those costs (and emissions), contracts could give discounts to customers who can use electricity outside of peak times, or those with two-way electric vehicle connections who can sell power back to the grid.
kinda funny how most electricity providers here ask extra fee for green energy like shut the fuck up.
>When there isn’t enough renewable power being generated or stored – like
on cold and calm winter days – the green power pool would buy
electricity from the wholesale market for limited periods and
quantities. To minimise those costs (and emissions), contracts could
give discounts to customers who can use electricity outside of peak
Doesn’t this sort of already exist in the form of variable tariffs that change based on wholesale prices, for example Octopus’ Agile tariff?
When there is abundant power from lower cost sources the price drops and when expensive gas plants are fired up the price rises.
>or those with two-way electric vehicle connections who can sell power back to the grid.
I’m really looking forward to vehicle to home/grid to become a reality, my EV can store enough power to run my house for a week but it sits there on the driveway as I import power at peak times…
Wholesale prices have risen by 250% since mid 2021. This is down to poor wind conditions through 2021 pushing generators to gas. Carbon prices have also pushed away from coal generation and into gas. Meanwhile, due to supply restrictions and high Chinese demand post-Covid, gas prices have soared by four times.
Wholesale electricity costs account for just 35% of the average customer bill in 2020, with the rest attributable to transmission and distribution charges, operating costs, environmental and social obligations, and taxes. Change to cheaper supply, and a third of this is represented by the retail price.