My UK energy provider says my electricity is produced with 100% renewables, so I presume water, wind, solar. So why am I affected by such big increases in electricity charges (price per kWh)?
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Because they can. I know I’m supposed to give a longer answer in this sub, so I’m writing words. But it’s because they can. They want to make money. There’s nothing deeper behind it.
I tried to look this up when my energy prices were set to rise even though I’m with Eon who apparently use 100% renewables, the answers online are vague as fuck and all I could find was a supposed government tax on renewables, I suspect as usual though it’s down to corporate greed
Your provider is only a billing company – it doesn’t matter who the provider is. It could be eon or another major company. The larger companies (like Eon) are divided up into different divisions. They have a power generating division, who sell electricity on the open wholesale market, and they have a billing division (which is who you deal with) who buy electricity from the wholesale market and charge you for it. If you have a “renewable / green” tariff then they attempt to ensure that when they purchase electricity that it comes from generating companies that produce by green means. That doesn’t affect the wholesale price.
So, the price comes down to the cost of wholesale electricity, which at the moment is extremely expensive. That’s caused in part by limited supplies of gas and oil from Russia and the rest of the world, as well as various green taxes, lack of generating capacity within the UK (we import power from France via undersea cables), and the high cost of “green” power generation.
Simple.
Your energy provider isnt an energy producer. They just BUY the energy from producers and sell it to customers like you.
The total supply of energy is under pressure from obvious sources, so those prices rise.
The renewable energy sources thus become more interesting for all potential buyers.
The supply is limited, but demand rises, so the price goes up.
The owners of these green energy producers wind/solar/water/nuclear, power plants are making more money because their costs didnt rise, but their sales prices did.
Another tip, renewable energy still required maintenance. Yes there is no fuel cost, but you still have to maintain it. Sending people out to replace a bad piece of electronics, clean the systems so they don’t corrode, replace the oil in a gearbox etc. Those consumables go up in price, the people cost more to hire, transport and house. Inflation affects everything.
If the price of fossil fuel derived electricity went up, but renewable electricity didn’t then every supplier would be trying to buy renewable electricity. This would push the price of renewable electricity up to match fossil fuel prices.
Because renewables cost isn’t instead of non-renewable cost, it’s in addition to it. You always need 100% electricity on the grid or things go bad real quick.
Sun and wind power are intermittent, meaning the sun doesn’t shine all the time and the wind doesn’t blow all the time. This means electricity production from renewable sources are constantly going up and down like stop and go traffic. So at any given time to keep 100% output on the grid you always need to back up renewables with reliable energy that you can scale up or down quickly.
In my country (Denmark) there is a principal that the last producer to deliver the needed energy sets the price for all…
Every day, all producers set there price for the next day and expected power supply, for many renewables this is close to zero. They can do this as if any fossil fuel is needed they get a much higher price, but they get that price to… On the other hand, if you are to expensive and not part of the supply you get nothing, same if the renewables are able to cover and all put in zero for the asking price…
Then your provider is trading for the amount he need on a energy exchange ie for the Nordic countries that is Nord Pool, your provider has committed to only buy renewables thus limiting him where to trade. Most places still have more than demanded renewables for trade, this is typically measured over a longer period ie a year, giving acces to grid stable energy outside of sun and wind
But regardless that you buy renewables certified, what you get in the plug is still grid mix as it is impossible to separate the different sources without pulling 100 different cables to every house
The key issue here is that, while renewable and non-renewable sources may not be interchangeable for you and your supplier, for many other players in the market they are. Why would anyone buy energy from a gas power station if they can buy it from a wind farm for a lower price? So the prices will generally tend to equalise. Of course this means that renewable and nuclear energy producers will now be making bigger profits, since their costs haven’t gone up that much.
Something else that may be part of the answer is cartel behaviour, which has been a recurring problem ever since electricity was privatised in the UK over the course of the 80s and 90s. Prior to this, you bought your electricity from a nonprofit regional electricity board, which according to neoliberal dogma is an inefficient way of doing things because there is no competitive market. Nowadays there are instead multiple retail energy companies that operate throughout the country – you buy your energy from whichever one of them you want, and they in turn pay someone else to provide you with energy. In principle, these energy suppliers are supposed to ruthlessly compete with each other, driving down prices. In practice, what they tend to do is make informal agreements with each other to set their prices at a level high enough for them to make big profits, but low enough that their customers won’t riot.
There have been various half-hearted attempts by the government to tackle cartel behaviour in the energy market. In particular, following a major investigation in 2016 that concluded that price fixing was rife, the government took steps to encourage more suppliers to enter the market, because if the introduction of competition failed to drive down prices (instead doing the exact opposite), clearly the solution is to have even more competition. However, it seems that this was too much competition, as many of these new suppliers have since gone out of business – around 30 in the last few months alone. So it wouldn’t be surprising if price fixing is on the rise again.
Supply and Demand 101. More demand, same amount of supply, prices increase. Like plane seats.
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