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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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.
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