The UK's Energy Crises - Speaks to my Inner Socialist!

The UK is currently facing an energy crises caused by the recent rapid increase in natural gas prices compounded by a number of other factors that limit the UK's capacity to switch to alternative energy sources.

The price of natural gas has quadrupled since the beginning of 2020, caused by a combination of depleted gas storage capacity because of a cold winter in many Northern Hemisphere countries last year and and increase in demand from China, ramping up its post-covid production.

Screenshot 2021-09-21 at 16.21.07.png
The recent trend in the Natural Gas price.

Market prices in Europe are especially high since Russia is refusing to pump more gas our way, preferring to pump it to China instead.

And within Europe, the UK is particularly badly placed to weather the coming winter (excuse the pun!) of high gas prices because of the following:

  • Some of its ageing nuclear power plants are out of action because of unplanned maintenance.
  • Its main source of electricity from France is out because of a fire in the cable providing it.
  • Last year just happened have been the least windy year since the 1960s and so Britain's wind turbines haven't been producing as much leccy as usual this year.

And with many other energy sources out of action, it has been falling to gas to plug the gap, meaning that companies providing gas have less of it stored now, making us more dependent on current market prices.

Not that storage makes much difference, the UK has a tiny gas storage capacity - it is only able to store 1% of its annual supply in any one go (like 3.5 day's worth WTF!).

Consequences

At the household level rising energy prices mean an increase of around 15% next year, increasing the average household's energy bill which is currently just over £1000 a year by £139, or £10 a month.

This may not sound like a lot, but will be a real struggle for the very poorest households, the poorest 10% at least, to pay.

Probably more dire is the longer term consequences on the energy supply market - OFGEM (the government regulatory body in charge of energy) only allows energy companies to increase prices twice a year, following its biannual review of the markets.

And there are dozens of small energy supply companies in the UK who simply won't be able to suck up the increased cost of gas for the next few months, meaning they could well go out of business, leaving only a handful of very large energy companies left by 2022.

This may not happen as the government is considering loans for such smaller companies, but is this just too little too late...?

The wrong kind of market interventions...

Providing loans to smaller companies to get through a period of high gas prices is backward, it's fire-fighting, surely it would have been better for the government to provide funding, subsidies, tax breaks to further diversify the UK's energy supplies before this crisis happened.

Britain may be cold and damp, but it's not Canada, and it's not Scandinavia - it is perfectly possible to radically insulate and even retro-insulate most houses for a few thousand pounds and drastically reduce space heating costs.

This, combined with vacuum water heating and solar panels on roofs feeding into the electricity grid could also greatly contribute to meeting the UK's energy requirements.

Combine this with building more storage capacity for natural gas and this wouldn't be anywhere near as much of a crisis.

It may not be possible for the UK to be 100% renewable but it is possible to significantly reduce its dependence on foreign energy supplies more than is the case currently.

NB - I don't believe in the nuclear solution - simply because nuclear waste remains radioactive for so many years and I just can't figure out a way of incentivising anyone to manage that radioactive legacy for that length of time! Better to not produce the stuff in the first place!

There is, of course, the smaller scale decentralised solution - move to a Woodland, grow your own firewood and small scale solar energy system, but the former requires a good couple of tightly managed acres and the later is a tough ask in the UK in December!

No, every time I hear 'energy crises in the UK' I just think a socialist programme is the only way to solve it!

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I have been saying that we should be working harder to reduce our dependence on fossil fuels. The campaigners for better insulation and Extinction Rebellion have been saying it too, but we have a government in league with the big companies who don't want to lose their profits. The UK has done fairly well from solar and wind, but we waste a lot of energy. If they really cared about 'net zero' they would do more. Too busy fighting 'culture wars'. Makes me angry.

!PIZZA

In fairness our renewables investment has been pretty good, but yes - the low hanging fruit really is 'insulation'!

Not sexy at all, but easy!

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Enery is my day job and this situatation is causing a lot of headache. The european energy policy is laughable these days. Russia refuse to pump more gas because Europe wants it to comply with eu rulles for the new pipeline.

The green energy policy is pushed to extreme imo. You always need base energy (or battery) and that comes from coal, gas or nuclear.

NB - I don't believe in the nuclear solution - simply because nuclear waste remains radioactive for so many years and I just can't figure out a way of incentivising anyone to manage that radioactive legacy for that length of time! Better to not produce the stuff in the first place!

New nuclear plants with new tech is the best solution. It produces the least waste and polution per energy created. How much waste wind turbine produce after they are depricated? How much the battery? Nuclear waste is far less of a trouble, and we can always lauch it to space :)

The nuclear is the fastest road as well, unlike the green option that is slow and expensive. This is a complicated topic, but just in short my two cents.

It's massively complex.

I think we just need a hard reset - billions of pounds in simply insulating houses would be a start, for example!

I remember staying in a super hi-tech home 20 years ago - a modern, 3 bed house, super insulated, body heat was sufficient to keep it warm in the middle of winter.

And apparently, the materials were good for 1000 years.

That's the kind of tech I like to see!

I'm probably not going to be convinced about nuclear, it's just too toxic, but I take your point about batteries, no one talks about them and how toxic they are!

Ultimately a diversified supply is what we need.

I'm a fan of off-grid as you know, but that's 'cos I like the idea of being able to control and maintain it myself, at least at the installation level, I know we need large scale infrastructure to build the stuff in the first place!

It is complex as you say.

Do you even need a day job any more!?

100% agree on insulation, the best way is to save energy in the firsf place ... the thing with insulation is that its not proportional with savings... after some level of insulation, 10 -15sm, each new sm, save less and cost the same ... and economy wins at the end ..... still lot better to have 15 sm ins. then 0.

Overall where possible savings should be aplied but again they are not 100% the solution ...

When talking about nuclear I mean new nuclear tech. Curent ones are all old 80s tech.

Do you even need a day job any more!?

I'm building a big safety net :)

And on top of all that, the spike in natgas prices is causing shortages of carbon dioxide in the UK, which impacts myriad supply chains.

I’ll bet you’re glad you moved to Portugal!

It's been in the news recently - we're heavily reliant on some American company for a lot of out CO2, but I think it's getting sorted...

It is a mess!

I'm glad I'm out, yes!

I’m here in Canada. I didn’t even notice a difference in our gas bill… and we have been heating the pool all summer ? Maybe we are locked in to lower prices until winter ? Maybe we will see high costs starting in December ? Will look into it now…


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I guess a lot could depend on where your energy comes from - you have an abundance of natural energy in Canada I'm sure!

I just checked …. We are paying 10.7 cents / cubic meter … https://www.oeb.ca/rates-and-your-bill/natural-gas-rates


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Wow … Natural Gas is super duper cheap in Canada compared to 2006… when it was 41 cents per cubic meter ..

C61EDDB7-3DE4-4938-9D6E-6963FC275F0A.jpeg


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The problem is that every home should have a small eolian turbine and few solar panel. Ironnically, to buy and install the Tesla solar roof, in 2020, when i checked, was £500 less than normal roof. I found back then some offers at Milton Keynes Tesla office, but now i think it closed. At least that's what I was told.


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There is a suggestion that Gazprom is manipulating gas prices to "encourage" Germany to approve the Nordstream 2 pipeline. See

https://www.bloomberg.com/news/articles/2021-09-17/eu-lawmakers-urge-probe-of-gazprom-s-role-in-gas-price-jump

It sounds like the smaller companies haven't been hedging their supply costs. Which should be a regulation really.

I mean, if you've customers on fixed price contracts for 12 months, or you know the maximum price you can charge on a variable contract for 12 months under government rules, you should be hedging that supply cost.

But I suppose that impacts on the profit margin. And if another company isn't doing it then they can charge less and take your market share and then you've no economies of scale.

Cheaper to hope it doesn't happen. And then let the limited liability of the company protect you if it does.

It's a right pain for all those customers with these companies. They're typically low price operators so people will have good deals.

But when you get moved across to one of the big 6, you'll be put on the standard pricing deal, which right now will be the maximum price. It could be quite a shock.

There was one article I read saying this was a good example of the wrong balance of regulation

Enough freedom to allow smaller companies to set up but then enough restriction to make what's happened a possibility.

Making energy cheaper just takes massive levels of investment - whether it's at a national or local level, you just have to suck up the cost up front and then these price shocks - you're much more resilient to them - whether that's companies or governments investing billions in high tech or families investing in smaller scale solar rigs, either way, it's pay A LOT now for peace of mind in the long term.

What the UK did was a joke - just tinkering with market price controls. Utterly insufficient.

The reason I say that this speaks to my inner socialist is that this precisely what the function of government should be IMO - use our taxes to GO HARD on the basics so we don't have to worry about it.

Don't sort of invest nothing and then interfere in a hap-hazard and light-touch manner.

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