A new price cap by regulator Ofgem means a typical home will pay £1,923 a year from October for energy.

An annual energy bill for a typical household will fall to £1,923 in October under regulator Ofgem’s new price cap.

I honestly think it’s appalling that they’re continuing to let these energy providers make obscene profits from us.

  • Bernie EcclestonedEnglish
    -1•1 year ago

    Their unit cost is zero?

    Capex is huge, and there will always be opex for people, repairs and maintenance. The blades and motors etc all have to be replaced regularly.

    Solar output is also much less during winter

    My new boiler can run a hydrogen mix and all the UK metal pipes are being replaced with plastic inserts so at some point green hydrogen could offset natural gas and that itself could be replaced eventually with syngas from biofuels.

    • HelloThereEnglish
      4•1 year ago

      Their unit cost is zero?

      Apologies, I meant to say Next Unit Cost, didn’t spot the missing word. As in the cost to produce one more unit of electricity. This measure ignores capex and is just opex plus associated usage costs like amortised wear and tear, depreciation, etc.

      It’s near 0, but not 0, because the input (wind, sun) is free, whereas gas (for CCGT) is not. As such renewables can sell in to the grid, profitably, at lower prices than fossil fuels can.

      The big problem, as you show with the example of cloudy winter days, is disconnecting generation from usage, via storage.

      Green gas from anorobic respiration, including hydrogen (or just blue hydrogen, made via electrolysis of sea water) is a useful step for retrofitting, but not something - in my opinion - that should be considered for new builds.

      • Bernie EcclestonedEnglish
        -1•1 year ago

        Ah, yes. But we can’t actually ignore capex, because most of the fossil fuel infrastructure is sunk cost.

        Renewables are net new capex, which needs a return. The reduction in cost of renewables is the best thing. A barrel of oil isn’t going to get any cheaper to pump out but wind and solar will. The war is already won, we just haven’t seen the benefits yet.

        I think green hydrogen would help smooth the peaks of renewables but it’s not very efficient, probably a better use is making ammonium nitrate for fertiliser or as a replacement for heavy oil for shipping

        • HelloThereEnglish
          2•1 year ago

          Context of the situation is important. You can’t use them interchangeably.

          Capex does not matter when we are talking about choosing to generate using existing infrastructure, because capex amortisation is the same regardless of whether you’re generating or not. Choosing whether to generate at 1am on a random Tuesday has nothing to do with your previous capex, but everything to do with your next unit cost. If price is higher than cost, you’ll generate, it not you (probably) won’t.

          Capex payback is important when businesses are evaluating building new generation. The spot price at 1am on a random Tuesday has nothing to do with whether you’re choosing to build new infrastructure. What does matter is average unit prices, over time, not one data point.

            • HelloThereEnglish
              3•1 year ago

              I’m not the person you originally replied to when you falsely claimed that renewables are only economically viable because of last generator pricing.

              I have explained why that isn’t the case, how both generation and new capacity decisions are made, the different aspects those decisions consider, and how because their next unit cost is lower due to generation input being free they are able to operate profitability at lower spot prices than are achievable for fossil fuels.

              One last time - capex payback is a consideration when building new capacity, yes, but that is based on average prices over decades. It is not a consideration when choosing whether to power up or down on at a specific time on a specific day.

              Attempting to simplify this to just capex is wrong.

                • HelloThereEnglish
                  2•1 year ago
                  • Why are you linking to a definition of economic viability for buildings? The main cost of traditional fossil fuel based electricity generation is the fuel source, over lifetime, not initial construction
                  • Higher returns due to high average costs certainty attract investment - I said as much in my first comment
                  • I agree with disconnecting prices from last generator, and that it will reduce inflation, because it would reduce the average price, all else being equal
                  • A lower average price would extend payback periods which may discourage investment when compared to the current pricing model, again all else being equal. This is a difficult comparison because it would presume an ability to choose between the two payment methods, which you can’t.
                  • We are still talking about average prices, over time, which again is different to spot prices, and both above points are further proof that your original statement of renewables being economically inviable is incorrect.
                  • Bernie EcclestonedEnglish
                    1•1 year ago

                    Because capex is capex. Buildings, solar, windmills. Doesn’t matter. All that matters is capex roi and opex unit per watt

                    We are still talking about average prices, over time, which again is different to spot prices, and both above points are further proof that your original statement of renewables being economically inviable is incorrect.

                    Now go read this and tell me that capex doesn’t matter

                    https://www.bbc.com/news/uk-england-norfolk-66263340