BRFR Cake Stop 'breaking news' miscellany

[First Aspect]

There is a price cap for the consumer not for wholesale prices. Brian is arguing about the wholesale markets.

No he isn't.

 

[PurplePenguin]

No he isn't.

There's quite a lot of other items that go into the consumer price in addition to the wholesale price.

 

[First Aspect]

There's quite a lot of other items that go into the consumer price in addition to the wholesale price.

Sounds very mysterious and complicated. Providing we are mistaken, that's thats theain thing you need to assure us.

 

[Psamathe]

Yes, but that 3% is setting the price for everything. IIRC, your point in the past has been that that then helps the investment side of renewables, but with their construction costs plummeting, at what point do we need a new mechanism? It seems like Miliband is edging towards a new formula.

An interesting article detailing one way the Government could decouple electricity from gas pricing
Crude Awakening: Averting the Unfolding Energy Crisis by Decoupling the Price of Electricity From Gas

Note: From thinktank common-wealth.org "Common Wealth is a progressive think tank designing ownership models for a more democratic and sustainable economy." - so they have an agenda.

 

[PurplePenguin]

Sounds very mysterious and complicated. Providing we are mistaken, that's thats theain thing you need to assure us.

It's something like this. No idea how up to date this is.

 

[First Aspect]

And bears do shoot in the woods.

 

[First Aspect]

It's something like this. No idea how up to date this is.

View attachment 14211

So yes, I think most people understand things like petrol price not being the same as crude oil per barrel. The overarching discussion is why, if the wind speed doesnt change depending on shipping in the gulf, why does. the price of that energy.

The solution is probably more complex, but I don't think "it's the free market duh" is the only available answer.

 

[Psamathe]

Some (eg Reform politicians) make a big issuie og the elecvtricity price being raised due to Government green energy surcharges (Green Levy?) and how costs could be removed by ending such charges.

But then we do provide a fair level of hydrocarbon subsidy through various more hidden means (eg tax exemptions), from 2025 https://www.globaljustice.org.uk/resource/fossil-fuel-subsidies-in-the-uk-who-pays-who-profits/

• The UK government currently provides an estimated £17.5 billion in fossil fuel subsidies and support per year. This figure includes subsidies for the fossil fuel industry (producers) and for consumers of energy (the public). Taxpayer-funded financial support for the fossil fuel industry stands at its highest level since 2016, demonstrating the continued inefficiency of our fossil-fuelled energy system.

In 2024 UK Green Levy raised less than £1.8 bn.

At least the "Green Levy" is above board, a "line item" we can all see where the hydrocarbon subsidies are hidden. To me how the money is taken is less important that the money is taken.

And maybe when the likes of Tice & Farãge start laying into the Green Levy it's more about their dislike of anything and everything reducing Climate Damage.

(Claiming no expertise, my maybe flawed understanding)

 

[PurplePenguin]

So yes, I think most people understand things like petrol price not being the same as crude oil per barrel. The overarching discussion is why, if the wind speed doesnt change depending on shipping in the gulf, why does. the price of that energy.

The solution is probably more complex, but I don't think "it's the free market duh" is the only available answer.

I don't expect the average raging member of public to understand this, but when a developer spent a load of money building something to harness the wind, they were made to take the risk on power prices. Most would have preferred not to, but it was all about the free market. Power prices were below expectations for years, particularly during Covid, then they suddenly jumped and only at that point did the system became hugely unfair.

Also, LCCC is the government's counterparty to all the CFD contracts. As prices go up, any renewable generator under a CFD contract will pay LCCC more. So the question I have is why are they/the government so quiet about this windfall they are receiving? I would guess they are the single biggest beneficiary after efficient gas generators.

 

[First Aspect]

I don't expect the average raging member of public to understand this, but when a developer spent a load of money building something to harness the wind, they were made to take the risk on power prices. Most would have preferred not to, but it was all about the free market. Power prices were below expectations for years, particularly during Covid, then they suddenly jumped and only at that point did the system became hugely unfair.

Also, LCCC is the government's counterparty to all the CFD contracts. As prices go up, any renewable generator under a CFD contract will pay LCCC more. So the question I have is why are they/the government so quiet about this windfall they are receiving? I would guess they are the single biggest beneficiary after efficient gas generators.

I supposed Ed Bendytoy is currently trying to figure a way to square the circle, and give us all free energy without creating another budget black hole.

In a way it's no different from the increasingly likely freeze on fuel duty being potentially cost neutral, but it won't be portrayed as that.

In fact, I'd wager there will be tax rises to pay for the tax they haven't not received.

 

[briantrumpet]

I don't expect the average raging member of public to understand this, but when a developer spent a load of money building something to harness the wind, they were made to take the risk on power prices. Most would have preferred not to, but it was all about the free market. Power prices were below expectations for years, particularly during Covid, then they suddenly jumped and only at that point did the system became hugely unfair.

Also, LCCC is the government's counterparty to all the CFD contracts. As prices go up, any renewable generator under a CFD contract will pay LCCC more. So the question I have is why are they/the government so quiet about this windfall they are receiving? I would guess they are the single biggest beneficiary after efficient gas generators.

OK, so two things here: there's always a risk for developers (I know a house developer for whom annual diesel costs have just gone up £500k overnight) – if the contract didn't stipulate that current arrangements would be in place for (say) 20 years, then it's their job to assess risk of future changes. If they were assured of prices for X years, then you either break the contract with agreed compensation, or you honour that contract but change the arrangements for new contracts. Otherwise you get stuck with an increasingly unjustifiable arrangement in perpetuity.

I suppose the question is, at what point, in your view, does tying wholesale prices to an energy source which is getting more and more marginal become unjustifiable, say on a scale of 20% down to 0%, or would you still say that it should be tied even if it's under 1% because, well, because...?

 

[PurplePenguin]

OK, so two things here: there's always a risk for developers (I know a house developer for whom annual diesel costs have just gone up £500k overnight) – if the contract didn't stipulate that current arrangements would be in place for (say) 20 years, then it's their job to assess risk of future changes. If they were assured of prices for X years, then you either break the contract with agreed compensation, or you honour that contract but change the arrangements for new contracts. Otherwise you get stuck with an increasingly unjustifiable arrangement in perpetuity.

I suppose the question is, at what point, in your view, does tying wholesale prices to an energy source which is getting more and more marginal become unjustifiable, say on a scale of 20% down to 0%, or would you still say that it should be tied even if it's under 1% because, well, because...?

There's always political risk in any investment, and renewable energy has been on the wrong side of this many times over the last 15 years. However, capping the amount at which one asset class can sell their product feels like a level direct discrimination that would be hard to do without damaging future investment.

The question you pose doesn't really make sense. There are 48 settlement periods in a day, if in any given one of those, 1% of generation came from gas, then the price would be substantially lower than if 20% came from gas. This is because the efficiency varies a lot. Also, it is not only gas that is price setting, all imported power has a price too.

Note that if 0% is from gas the price can go negative, so renewable generators suffer. Or in other words, when there is lots of wind, they receive less revenue - something that is known as cannibalisation, and is only getting worse. There aren't really super returns to be had.

Anyway, to answer your question in another way, do I think renewables are being overpaid? No. Do I think that using gas should be penalised? Yes. Trump is doing his bit for carbon neutrality.

 

[briantrumpet]

There's always political risk in any investment, and renewable energy has been on the wrong side of this many times over the last 15 years. However, capping the amount at which one asset class can sell their product feels like a level direct discrimination that would be hard to do without damaging future investment.

The question you pose doesn't really make sense. There are 48 settlement periods in a day, if in any given one of those, 1% of generation came from gas, then the price would be substantially lower than if 20% came from gas. This is because the efficiency varies a lot. Also, it is not only gas that is price setting, all imported power has a price too.

Note that if 0% is from gas the price can go negative, so renewable generators suffer. Or in other words, when there is lots of wind, they receive less revenue - something that is known as cannibalisation, and is only getting worse. There aren't really super returns to be had.

Anyway, to answer your question in another way, do I think renewables are being overpaid? No. Do I think that using gas should be penalised? Yes. Trump is doing his bit for carbon neutrality.

OK. As I say, I know you know more about it than I do, but, to be as neutral/non-committal as I can be, one day gas won't be setting the price for renewables, and it's going to be interesting how & when that transition happens.

 

[briantrumpet]

I'm trying to wrap my head around two roundabout upgrades on the A19 costing £775 million. That's over £10 for every person living in the UK. For two adjacent roundabouts. In Northumberland.

https://www.msn.com/en-gb/news/othe...roundabouts-would-cost-up-to-775m/ar-AA1JwFKS

 

[BoldonLad]

I'm trying to wrap my head around two roundabout upgrades on the A19 costing £775 million. That's over £10 for every person living in the UK. For two adjacent roundabouts. In Northumberland.

https://www.msn.com/en-gb/news/othe...roundabouts-would-cost-up-to-775m/ar-AA1JwFKS

View attachment 14217

Hmm, big numbers. Two other roundabout on the A19 have been upgraded in recent years, at significant cost, but, no where near £775million.

Silverlink Roundabout £75million around 2018

Testo's Roundabout approx £140million, around 2021

Can't see us getting £775million spent on us, we are 350 miles too far North for that sort of money to be spent. 😂