What is the cause of the steep energy price rises? Many homeowners have already been affected by the challenges suppliers are fighting with. If they are on a variable energy price tariff prices have already as much as doubled in some cases, for others on fixed price tariffs, that price rise is just delayed as many providers are losing money on the electricity they are supplying and when the contracts renew the unit price will hit the government’s maximum price cap.
The problem has several contributing factors, which include record low levels of British and European gas storage due to higher usage in the first half of the year, LNG (liquefied natural gas) tankers from places like Asia and the US which we normally receive are being held at source as they are needed in the producing country and European pipeline deliveries have reduced year-on-year, which has caused prices to rise. There is high demand for gas across the continent. Low wind generation across Europe in 2021 has driven demand from gas-burning power stations.
Using gas reserves to generate power has exacerbated the demand for gas.
The good news is that in the third quarter of 2019, the UK’s wind farms, solar panels, biomass and hydro plants generated more electricity than the combined output from power stations fired by coal, oil, and gas for the first time.
However, and this may come as a surprise, we are still reliant on gas to contribute the majority of our non-renewable energy. Most of the UK’s gas imports come from Norway, but Russia is also a supplier. This reliance on energy supplies that are not dependable further emphasises the importance of the transition to net-zero carbon dioxide emissions to reduce our reliance on changes in gas prices and supply.
In July, a fire prevented the import of electricity from France via a high voltage subsea power cable. There are also planned shutdowns at gas plants and the retirement of two nuclear reactors. The National Grid’s annual assessment of Great Britain’s resilience to disruption to electricity supplies has resulted in the key “margin” figure falling to its lowest in five years. The grid has advised that the risk of UK power cuts this winter has increased because of the energy crisis. At the same time as the increased pressure on the grid, an ‘electric revolution’ is happening in car sales.
Aside from the likes of Tesla, other major car manufacturers are predicting that electric vehicles will dominate sales within 10-15 years. General Motors will make only electric vehicles by 2035, all vehicles sold in Europe by Ford will be electric by 2030 and VW projects that 70% of its sales will be electric by 2030. Converting from petrol/diesel to electric on this scale is creating a substantial additional electricity demand. Unless this demand can be met, power cuts will become inevitable.
Most consumers are unsettled about the substantial energy price increases and this is also feeding another revolution in the move to renewable energy generation. Record levels of homeowners choosing integrated solar and battery systems which enable them to charge an electric vehicle for pennies and drive for hundreds of miles whilst also reducing electricity bills and eliminating the risk of their home life being disrupted by power cuts.