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Power and Gas Prices Falling.

April 15, 2014

By Paul Homewood

 

140407_Crude-oil-and-annual-wholesale-gas-and-power-prices

http://www.catalyst-commercial.co.uk/catalyst-business-energy-market-brief-april-2014-crimea-tensions-fail-to-halt-continued-slide/

 

Despite a little blip in early March, following tensions in Crimea, both gas and electricity prices in the UK continue their fall, which began at the start of the year.

Wholesale power prices stood at £49.40 at the end of March, on the back of lower coal and gas prices.

Part of the justification for subsidising renewables is that, in the long run, they will work out cheaper than fossil fuels, on the assumption that prices of the latter increase much faster than inflation. Yet over the last two years, the opposite has been true and the gap has widened.

Let us just recall the Strike Prices laid out by DECC last December, which guarantee the price renewable operators and nuclear power plants will receive. Bear in mind that:

1) The Strike Prices are based on 2012 Prices, and are uplifted each year for inflation, using the CPI index.

2) The contract period for renewables (but not nuclear) is 15 years.

3) The Strike Prices apply to generators commissioning in that particular year.

So, for instance, an offshore wind operator, starting up in 2015, will receive £155/MWh for 15 years, whereas one starting up in 2019 will receive £140/MWh for its 15 years.

 

 

image

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/263937/Final_Document_-_Investing_in_renewable_technologies_-_CfD_contract_terms_and_strike_prices_UPDATED_6_DEC.pdf

 

The CPI index has increased by 4.5% since March 2012, so, taking offshore wind commissioned in 2014/15 as an example, the current price will be increased from £155/MWh to £161.98/MWh. With a current wholesale price of £49.40, this means the subsidy will start at £112.58/MWh.

Retail electricity prices seem to be around £110/MWh at the moment, so all power from offshore wind commissioned over the next couple of years will effectively cost consumers double what they are currently paying.

 

Meanwhile, the useful idiots at the BBC have finally woken up! They are concerned that curbs on onshore wind will lead to more offshore turbines.

 

image

http://www.bbc.co.uk/news/science-environment-26958327

 

And why the concern? Because offshore wind is even more expensive than onshore!

It’s funny how they have not been concerned about the impact of wind and solar power on electricity bills before!

3 Comments
  1. dave ward permalink
    April 15, 2014 7:48 pm

    “Because offshore wind is even more expensive than onshore!”

    Due to the effects of corrosion, maybe?

    http://windfarmaction.wordpress.com/2014/04/12/offshore-wind-future-sustainable-energy/

    Any sensible person (particularly one with experience of the sea) could have predicted this was going to happen! What a pity my father (a structural engineer) isn’t still alive to see that picture…

  2. April 15, 2014 9:01 pm

    We are all entitled to hear the latest opinion of the BBC. After all, some people simply can’t afford to buy the Guardian.

  3. April 15, 2014 10:36 pm

    Gas prices have fallen not least because it’s been a relatively mild winter, especially compared with last winter, so consumption has been below average. Maybe its a benefit from Global Warming!

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