What’s the latest on the energy crisis and what does it mean?
When we last wrote about the energy crisis in September, four energy suppliers had ceased trading. Since then, a further 21 companies have exited the market. The root cause of the chaos is that international gas markets are at record highs, but a closer look reveals that some suppliers were much better prepared to weather the storm than others.
Good Energy have been operating a prudent, sustainable business model for over 20 years and so we have been able to safely navigate the uncertainty of the last few months. While our prices have risen, we are still fairly priced. We are also the highest rated supplier awarded Eco Provider for Energy status by Which? magazine. If you want more of your bill directly supporting renewable generators in the UK, we’re still the place to be.
Wholesale markets
Wholesale prices have continued to rise. Since January, gas prices for next year have quadrupled and power prices have more than tripled. Lower temperatures mean that more gas is required for heating as well as electricity generation, pushing prices up. In addition to this, German regulators have delayed the opening of Nord Stream 2, a pipeline which will deliver extra gas capacity from Russia. Moscow is insisting that European nations lock in to very long 20-year deals before they increase flows of gas – something that nobody is keen to do. Growth in Chinese industrial activity also means increased global competition for gas stocks.
Generator performance
Over the last few months, especially in September, low wind speeds contributed in a small way to high prices. Additionally, 33% of the country’s nuclear fleet is offline for maintenance, most but not all of which is planned. Some gas plants are also still pocketing record sums of cash by manipulating their availability, to the extent that National Grid has recently announced an investigation.
Why do gas prices increase the cost of renewables?
People sometimes ask why high gas prices would impact a renewable supplier like us. Renewables have seen enormous reductions in costs over the last 15 years and are now among the cheapest ways to generate power. However, the price of electricity at any one time is typically set by the last generator to turn on. In the UK, that is often gas. If that gas is very expensive, then generators of other types can then sell their electricity for more. If it is very sunny or (more likely for this time of year) windy, then this impact will be mitigated.
What next?
The long-term answer to the problem is the same as it was three months ago, and the same as it will be three months from now. We need to use less gas, and more renewables. The less reliant we are as a nation on volatile fossil fuel markets, the more insulated we will be from events like this. We’ve shown that an almost entirely renewable energy system can provide for the UK in all conditions – we just need to build it.
In the short term, prices are set to stay high for the rest of this winter. It is always a good idea to try to save energy, and that is truer now than ever — read our tips on how to save energy this winter. And if you’re a Good Energy customer finding it difficult to afford your energy please do get in touch. You can also get independent advice about your energy bills from Citizens Advice.
Ultimately, however long this tricky period lasts, Good Energy will continue to serve our customers and support renewable generators all over the UK. Thank you for helping us.
