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DECC Claim They Are “Driving Down Electricity Costs”!

May 7, 2016
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By Paul Homewood  

 

h/t Stewgreen

 

image

https://www.gov.uk/government/news/securing-the-uks-electricity-supply

 

DECC have now reported on the results of the consultation it held into the operation of the capacity market it began in March:

 

The Government is taking action to ensure the UK’s long-term energy security as it builds a system of energy infrastructure fit for the 21st century.

Following a consultation launched in March, a package of reforms to the Capacity Market has been confirmed. The Capacity Market is the UK’s principal tool to ensure we have secure supplies of electricity.

It is driving down costs and securing electricity at the lowest possible price for bill-payers. It gives market participants a payment to ensure there is enough electricity available during peak times in the winter.

Responses to the March consultation reflected clear support from industry and investors for three key reforms which will ensure the Capacity Market continues to deliver energy security:

  • Buying more electricity and buying it earlier;
  • Toughening sanctions for firms which go back on their Capacity Market agreements;
  • Bringing forward the Capacity Market by one year to the winter of 2017/2018.

In light of these responses, the Government has set out its intention to hold an auction this winter for delivery in 2017/2018 and will proceed with its other core proposals in the consultation, giving both bill-payers and the energy industry more certainty for the coming winters.

This will better safeguard our energy security so we can protect families and businesses from spikes in energy costs in the future.

https://www.gov.uk/government/news/securing-the-uks-electricity-supply

 

There are no surprises. They have been concerned for some time about the rapid closure of coal capacity, and an auction for 2017/18 was always on the cards. Whilst the increase in capacity that they are looking to buy, expected to be around 3GW, will help to push up the auction price (which is paid to all successful applicants), it is not clear whether this will incentivise the major expansion in CCGT that is needed.

But what is notable is this comment:

 

It is driving down costs and securing electricity at the lowest possible price for bill-payers.

 

This is all very strange, because, according to the Office for Budget Responsibility, the Capacity Market will be costing us all £1.1 billion a year by 2020.

 

image

http://budgetresponsibility.org.uk/efo/economic-fiscal-outlook-march-2016/

 

And, of course, there would be no need at all for the Capacity Market, but for DECC’s own policies pushing intermittent renewables, which will be adding an extra £10.9 billion annually by 2020.

14 Comments leave one →
  1. Graeme No.3 permalink
    May 7, 2016 1:12 pm

    “It is driving down costs” – it is an article, if not of faith then oft repeated, that wind is free, therefore wind electricity is free. Similarly for solar energy.
    Repeated only today by the South Australian Treasurer in response to queries about future electricity supplies, although his nickname of “Silly Koot” may not provide 100% reassurance. I might add that I rarely use that nickname, preferring a comparison between his mental capacity and that of a raspberry seed. A not particularly endowed raspberry seed.

  2. Joe Public permalink
    May 7, 2016 1:27 pm

    Reality:

    My 1-year dual-fuel contract with First Utility expires end of May.

    Current electricity prices are Elec DAY rate 9.726 p/kWh; NIGHT rate 7.979 p/kWh; S/c 18.68 p/day.

    They want to bump prices up Elec DAY rate 11.088 p/kWh; NIGHT rate 11.088 p/kWh; S/c 16.92 p/day.

    Total increase = 11.71%

    I’ve thrown my consumption figures into Compare the Market, and the ‘best’ their suppliers can do is +9.38%

    If I was to Virtue Signal by going to OVO’s 100% Renewable tariff, it’d cost me +54% more than last year.

    By coincidence, Andrew Neil has today Tweeted: “Why has @edfenergy increased my unit rate for electricity from 11.87p to 13.26p >10%! When energy prices falling. Time to switch.”

  3. AlecM permalink
    May 7, 2016 2:36 pm

    Big Brother is pleased to announce that the chocolate ration has been increased from 30 g to 25 g per day.

    Long Live Big Brother.

  4. Ben Vorlich permalink
    May 7, 2016 3:30 pm

    If you have a plan to go to X% renewables then by getting those renewables at the lowest price it is easy to convince yourself you’re driving prices down. The fact that other “Dirty Carbon” sources are much cheaper is irrelevant in that thought process.

  5. RogerJC permalink
    May 7, 2016 3:55 pm

    Today’s Daily Telegraph actually reports this as a £3 Billion bill on consumers (equal to £38 per household) to keep the lights on. It goes on to say that ministers tried to sneak it out hidden by election news and that ministers “claim” it is actually saving the country money as without there would be blackouts.

    Is this a record, one of our newspapers telling it like it is?

    • May 7, 2016 7:44 pm

      Almost, except that £3 billion equates to about £115 per household!

      • May 8, 2016 9:42 am

        Yes but we pay most of that INDIRECTLY, cos most electricity is not used by domestic users. Rather the non-domestic sector will also pay larger bills ..but that extra will be paid by the magic money pixiies.. No of course not at the end of the day it will filter thru to the public in the form of increased prices for the goods/services we pay for their products

    • May 8, 2016 9:56 am

      Hey note the ending paragraph of Emily’s piece
      Just like her May 5th piece …. At the end of Today’s piece she basically says “This is another advertorial brought to you by DECC”

      Did you miss yesterday’s piece ? Fracking decision could see shale gas powering UK homes this year

  6. Sara Hall permalink
    May 7, 2016 6:52 pm

    We motor sailed around 2 sides of the enormous Thanet offshore wind farm the other day in about 10 knots of wind. Most of those monstrosities barely moved at all during the hour it took us to get past and for some time I could see (and videoed) just 3 out of the 100 turbines actually moving at all. I later worked out that “they” would have received a subsidy of £11,400 for that hour. Money for abso-bloomin’-lutely nothing then.

  7. May 8, 2016 8:12 am

    There seem to be a couple of mis-prints to correct:

    This statement – ‘The Government is taking action to ensure the UK’s long-term energy security as it builds a system of energy infrastructure fit for the 21st century’ – should read:

    The Government is taking action to ensure the UK’s long-term energy INsecurity as it builds a system of energy infrastructure UNfit for the 21st century.’

    DECC apologises for these errors😉

  8. Graeme No.3 permalink
    May 8, 2016 9:52 am

    from http://reneweconomy.com.au/2016/infigen-energy-where-to-from-here-79184

    “We all underestimated the operating cost of a wind turbine. Since the wind was free the natural expectation was that the variable operating expenditure [opex] of a wind farm would be very low. In fact it turns out that gearboxes break down and that these big powerful pieces of equipment cost a lot to run. It works out to be about $20/MWh, that’s more than a brown or black coal generator. That’s right, the open for a wind farm is probably higher than for a coal generator.

    And it’s not just wind. According to data released earlier in the year by ARENA, PV solar farms also cost around $20/MWh. It’s a mystery to me where that money goes.”

    The author David Leitch may not have a long stay at reneweconomy if he keeps writing about facts not dreams (or hallucinations ).

  9. May 8, 2016 11:17 am

    Do auctions make ANY difference at all, if no one is building anything useful?
    A Promise to supply, is only a Promise.

    RS

  10. Russ Wood permalink
    May 8, 2016 4:05 pm

    Johannesburg, South Africa has a secure electricity supply – with an average of 11 (localised) power failures every day. See
    http://www.timeslive.co.za/sundaytimes/stnews/2016/05/06/Left-in-the-dark-Johannesburg-suffers-11-power-failures-a-day
    Now, as the ship is sinking, we’re supposed to get into ‘renewables’?

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