It's useful to have published the charts going back to 2000, when energy prices were generally low - oil was around $25/bbl. The UK was self-sufficient in gas - in fact, it had a small export surplus, particularly in summer months - and UK gas prices were among the lowest in the world, and cheaper than in the US. This chart show the history of production, imports (split between LNG and pipeline gas) and exports and storage injection and withdrawal to meet demand
We can see that after 2004 the UK started to rely on Norwegian imports to cover winter demand, supplemented by some re-importation from Belgium (probably effectively Norwegian gas delivered via Zeepipe) and later from the Netherlands. LNG imports were actually surplus to UK requirements, but allowed continued export to Ireland and to the Continent which had limited LNG terminal capacity. Global gas trade remained dominated by pipeline supply except in Asia, so markets remained largely isolated from each other. After 2008 (when global prices were affected by money pouring into commodity markets from crashing bond markets) Qatari volumes ramped up rapidly, and together with other important sources - Australia, Russia, US - LNG became much more important in trade volumes. The Fukushima crisis saw a huge increase in demand from Japan, which sent LNG prices soaring particularly in Asia. The UK managed to avoid the need to import LNG for its own use by running its coal capacity flat out: as the chart shows, demand dropped sharply in 2011-14 in consequence. Gas generation increased again as the Large Combustion Plant Directive led to closures of coal capacity, and as gas was needed to balance intermittent wind.
Meanwhile UKCS production had ceased providing much in the way of seasonal flex supply, with heavy reliance on Norway - a feature that killed the economics for storage, leading to the closure of Rough after it sprang a leak, as it was not economically justified to reinstate it. However, by 2020 North Sea gas production was cut back in the face of low prices and low lockdown demand, and for the first time we became significantly dependent on LNG supply. When demand returned, but because of lack of investment and reduced maintenance, supply did not in 2021, prices started rising, and became led by the cost of imported LNG in a market short of supply globally. Europe's increasing dependence on LNG as Russian supply was cut back left the UK acting both as an LNG terminal, exporting via pipeline to the Continent, and also greatly increasing gas generation in order to keep France supplied with power while they suffered extensive nuclear outages, particularly in 2022 - see chart.
The message here is clear: Miliband is wrong to claim that gas is priced on world markets if you produce it yourself. You save having to bid for it, which in tight supply conditions means bidding more than someone else can afford: it has nothing to do with cost of supply. If you can't supply it yourself, then you should be encouraging other good sources of supply to ensure competitive pricing.
Meanwhile, Ofgem figures show UK electricity is cheaper than this - see https://www.ofgem.gov.uk/get-energy-price-cap-standing-charges-and-unit-rates-region. Units are around 22p/kWh and the standing charge is around 50-60p/day. Average daily use is around 12 kWh/day, so the standing charge adds 5p/kWh to the price of electricity. Total roughly 27p/kWh
So Germany has the most expensive domestic electricity at 33.2p/kWh while UK comes in at 80% of this at 27p/kWh. In 2024. Now.
OFGEM quote annual consumption of 2,700kWh per home, or daily consumption of 7.4kWh. From your link OFGEM are quoting GB average of 60.99p/day for standing charge , or 8.25p/kWh, together with 24.50p/kWh is 32.75p/kWh. That is for direct debit.
Those on standard credit face a standing charge of 67.06p/day, and unit rates of 25.79p/kWh, which totals 34.85p/kWh.
I still do not understand why actions are not being taken to reverse this unfavourable trend in energy costs. Great Britain, like other countries, is not making these decisions. The EU was supposed to be a leader in climate change and protection, it was supposed to attract others with its example. Not only has it not attracted others, but it is a counter-example - expensive energy, deindustrialization, impoverishment of citizens, and a threat to energy security. CO2 emissions are still growing, so the effects are not attractive either. There is only one unanswered question - why is there still no sobering up, rational assessment, and wise decision?
You answered your question about why these prices are higher and why the government continues with it. It’s because there are financial derivatives of the market and banks would rather make money from abstract things than physical things that take time.
We saw this some time ago with the WWF offering to save a tiger or some animal. They could buy some jungle on your behalf but in reality that land had a much much higher potential carbon credit (tithe) than when that system was implemented as it is now they would make a packet.
We don’t have serious people in government. We have had fanatical fantasists for a long time.
David are these prices normalised to allow the daily standing charge as well? I as k because my supplier now charges 56p/day (an avg 6p/kwh for my annual consumption) for that element and told me its not them that sets it but OFGEM as all the money goes to other entities largely the DNO who then recycle it on to the various other pots of gold that prop up this façade.
Ofgem caps the total of unit prices plus daily standing charge for a typical customer. So the higher the standing charge, the lower the per unit rates have to be, and vice versa.
Typical UK electricity use is around 500 W, or 12 kWh/day. Sounds like yours is a little lower.
What is your per unit rate? Ofgem say the UK average is 21p/kWh, so UK domestic electricity is closer to 27p/kWh than 37p/kWh at the moment. The UK government figures for 2023 say 36.39p/kWh, so it has gone down hugely since last year.
Thank you David! The cover story of the price of gas is crumbling. How long before Joe Public catches on to the fact that despite all this cheap renewable energy, his bills keep going up, and the backlash starts? Too long of course.
I'm still reeling from your expose of Miliband and NG ESO a while back. Years in opposition give politicians time to think, a luxury that being in government denies. Given his supposed interest in the subject, he should have arrived in office with a pragmatic, practical, detailed, costed plan, but in truth, he simply couldn't be bothered to do his homework.
All political careers may end in failure, but that failure is often failure of something important to us, and not politicians' careers.
Price of UK gas has crept up over last qtr to highest in over a year although the hub price is still under 3p/kwh so theres a lot of oncost to getting it to your boiler
David asks “What are we to make of this?” Could it be because the UK is the only country with a legally-binding Climate Change Act (since 2008), ratcheted up in 2019 at the bidding of the global green blob to Net Zero? Could it be because the rabidly ideological politicians of the UK Uniparty are self-proclaimed “world leaders” in the deployment of weather-dependent wind and solar power? Rupert Darwall reports on Boris Johnson at COP26 saying “The UK can be the Saudi Arabia of wind power” while UK energy prices soar: https://www.realclearenergy.org/articles/2021/09/30/boris_johnson_bets_on_wind_796823.html.
These wholly inappropriate technologies are not only short lifespan and toxically non-recyclable, they are expensive to build and integrate, heavily resource-depleting, inefficient and unreliable.
The tragedy is that there is no need whatsoever to attempt to reduce CO2 emissions because atmospheric CO2 is already “saturated”, which means even a doubling of its concentration from the present level will cause negligible global warming, but would be very beneficial to agriculture and forestry.
Reform UK is the only Westminster party committed to scrapping Net Zero.
Exposing the 'net zero sceptic' myth that renewables makes British electricity more expensive https://davidtoke.substack.com/p/exposing-the-net-zero-sceptic-myth
Maybe this will be a good read?
https://www.brainzmagazine.com/post/take-back-manufacturing-climate-realism
In order to meet his 2030 target, Miliband is planning to repeal some laws. Unfortunately, he has in mind the Laws of Thermodynamics.
It's useful to have published the charts going back to 2000, when energy prices were generally low - oil was around $25/bbl. The UK was self-sufficient in gas - in fact, it had a small export surplus, particularly in summer months - and UK gas prices were among the lowest in the world, and cheaper than in the US. This chart show the history of production, imports (split between LNG and pipeline gas) and exports and storage injection and withdrawal to meet demand
https://image.vuukle.com/9ffc6604-feed-474e-a82d-c2de2f561502-03382e07-9146-47d5-ae32-97cbca41cb89
We can see that after 2004 the UK started to rely on Norwegian imports to cover winter demand, supplemented by some re-importation from Belgium (probably effectively Norwegian gas delivered via Zeepipe) and later from the Netherlands. LNG imports were actually surplus to UK requirements, but allowed continued export to Ireland and to the Continent which had limited LNG terminal capacity. Global gas trade remained dominated by pipeline supply except in Asia, so markets remained largely isolated from each other. After 2008 (when global prices were affected by money pouring into commodity markets from crashing bond markets) Qatari volumes ramped up rapidly, and together with other important sources - Australia, Russia, US - LNG became much more important in trade volumes. The Fukushima crisis saw a huge increase in demand from Japan, which sent LNG prices soaring particularly in Asia. The UK managed to avoid the need to import LNG for its own use by running its coal capacity flat out: as the chart shows, demand dropped sharply in 2011-14 in consequence. Gas generation increased again as the Large Combustion Plant Directive led to closures of coal capacity, and as gas was needed to balance intermittent wind.
Meanwhile UKCS production had ceased providing much in the way of seasonal flex supply, with heavy reliance on Norway - a feature that killed the economics for storage, leading to the closure of Rough after it sprang a leak, as it was not economically justified to reinstate it. However, by 2020 North Sea gas production was cut back in the face of low prices and low lockdown demand, and for the first time we became significantly dependent on LNG supply. When demand returned, but because of lack of investment and reduced maintenance, supply did not in 2021, prices started rising, and became led by the cost of imported LNG in a market short of supply globally. Europe's increasing dependence on LNG as Russian supply was cut back left the UK acting both as an LNG terminal, exporting via pipeline to the Continent, and also greatly increasing gas generation in order to keep France supplied with power while they suffered extensive nuclear outages, particularly in 2022 - see chart.
https://i0.wp.com/wattsupwiththat.com/wp-content/uploads/2023/02/GB-Gen-Price-HQ-1676233783.8236.png
The message here is clear: Miliband is wrong to claim that gas is priced on world markets if you produce it yourself. You save having to bid for it, which in tight supply conditions means bidding more than someone else can afford: it has nothing to do with cost of supply. If you can't supply it yourself, then you should be encouraging other good sources of supply to ensure competitive pricing.
The headline and comparison is already out of date.
Germany is claiming to have the most domestic expensive electricity in the world in June 2024 at €0.3951/kWh, which is 33.2p/kWh. See https://countryeconomy.com/energy-and-environment/electricity-price-household/germany.
Meanwhile, Ofgem figures show UK electricity is cheaper than this - see https://www.ofgem.gov.uk/get-energy-price-cap-standing-charges-and-unit-rates-region. Units are around 22p/kWh and the standing charge is around 50-60p/day. Average daily use is around 12 kWh/day, so the standing charge adds 5p/kWh to the price of electricity. Total roughly 27p/kWh
So Germany has the most expensive domestic electricity at 33.2p/kWh while UK comes in at 80% of this at 27p/kWh. In 2024. Now.
Go Germany! This is not a competition we should be trying to win, Peter.
OFGEM quote annual consumption of 2,700kWh per home, or daily consumption of 7.4kWh. From your link OFGEM are quoting GB average of 60.99p/day for standing charge , or 8.25p/kWh, together with 24.50p/kWh is 32.75p/kWh. That is for direct debit.
Those on standard credit face a standing charge of 67.06p/day, and unit rates of 25.79p/kWh, which totals 34.85p/kWh.
Please note we are now in October.
I still do not understand why actions are not being taken to reverse this unfavourable trend in energy costs. Great Britain, like other countries, is not making these decisions. The EU was supposed to be a leader in climate change and protection, it was supposed to attract others with its example. Not only has it not attracted others, but it is a counter-example - expensive energy, deindustrialization, impoverishment of citizens, and a threat to energy security. CO2 emissions are still growing, so the effects are not attractive either. There is only one unanswered question - why is there still no sobering up, rational assessment, and wise decision?
Will this article or Matt Ridley's be circulated to Starmer and Miliband?
It is already out of date. UK electricity is currently around 80% of the cost of German electricity.
German electricity can be obtained rather cheaper:
https://www.stromauskunft.de/strompreise/
Günstiger is cheapest.
The fix ..stop NetZero...
Sheffield has more than 5 wiers, and we don't generate 1 Watt of power from any of them.
You might be disappointed at their potential.
https://www.sheffieldrenewables.org.uk/wp-content/uploads/2010/12/Sheffield-Renewables-Weir-Survey-Energy-Modelling.pdf
Less than 500kW maximum output. The economics don't look too bright, which is why these sites haven't been developed
Clearly need a higher subsidy then!!
What's wrong with using weather-dependent wind and solar power? After all we can, apparently, control the climate by the power of hubris.
And by raising taxes. Politicians always think you can solve problems with higher taxes and a bigger state.
Yep, more is always better to the totally ignorant & insane.
You answered your question about why these prices are higher and why the government continues with it. It’s because there are financial derivatives of the market and banks would rather make money from abstract things than physical things that take time.
We saw this some time ago with the WWF offering to save a tiger or some animal. They could buy some jungle on your behalf but in reality that land had a much much higher potential carbon credit (tithe) than when that system was implemented as it is now they would make a packet.
We don’t have serious people in government. We have had fanatical fantasists for a long time.
David are these prices normalised to allow the daily standing charge as well? I as k because my supplier now charges 56p/day (an avg 6p/kwh for my annual consumption) for that element and told me its not them that sets it but OFGEM as all the money goes to other entities largely the DNO who then recycle it on to the various other pots of gold that prop up this façade.
Ofgem caps the total of unit prices plus daily standing charge for a typical customer. So the higher the standing charge, the lower the per unit rates have to be, and vice versa.
Typical UK electricity use is around 500 W, or 12 kWh/day. Sounds like yours is a little lower.
What is your per unit rate? Ofgem say the UK average is 21p/kWh, so UK domestic electricity is closer to 27p/kWh than 37p/kWh at the moment. The UK government figures for 2023 say 36.39p/kWh, so it has gone down hugely since last year.
That's my understanding, yes they include standing charges
Thank you David! The cover story of the price of gas is crumbling. How long before Joe Public catches on to the fact that despite all this cheap renewable energy, his bills keep going up, and the backlash starts? Too long of course.
I'm still reeling from your expose of Miliband and NG ESO a while back. Years in opposition give politicians time to think, a luxury that being in government denies. Given his supposed interest in the subject, he should have arrived in office with a pragmatic, practical, detailed, costed plan, but in truth, he simply couldn't be bothered to do his homework.
All political careers may end in failure, but that failure is often failure of something important to us, and not politicians' careers.
Price of UK gas has crept up over last qtr to highest in over a year although the hub price is still under 3p/kwh so theres a lot of oncost to getting it to your boiler
David asks “What are we to make of this?” Could it be because the UK is the only country with a legally-binding Climate Change Act (since 2008), ratcheted up in 2019 at the bidding of the global green blob to Net Zero? Could it be because the rabidly ideological politicians of the UK Uniparty are self-proclaimed “world leaders” in the deployment of weather-dependent wind and solar power? Rupert Darwall reports on Boris Johnson at COP26 saying “The UK can be the Saudi Arabia of wind power” while UK energy prices soar: https://www.realclearenergy.org/articles/2021/09/30/boris_johnson_bets_on_wind_796823.html.
These wholly inappropriate technologies are not only short lifespan and toxically non-recyclable, they are expensive to build and integrate, heavily resource-depleting, inefficient and unreliable.
Here’s a shocking image of the massive concrete and steel foundations of an unsustainable modern wind turbine which will no doubt remain in the ground forevermore: https://x.com/macnahgalla/status/1841483346603298942?t=wSrn1l68a5UWwAkPJCRjQA&s=19.
The tragedy is that there is no need whatsoever to attempt to reduce CO2 emissions because atmospheric CO2 is already “saturated”, which means even a doubling of its concentration from the present level will cause negligible global warming, but would be very beneficial to agriculture and forestry.
Reform UK is the only Westminster party committed to scrapping Net Zero.
Maybe this will be a good read?
https://www.brainzmagazine.com/post/take-back-manufacturing-climate-realism