UK energy pricing is broken
Most of us only see the cost of our energy via regular energy bills. The ever increasing cost can be painful. Despite all the investment in renewal energy, and the massive growth in wind farms all over the country, the cost is not reducing. Why?
It's simple... The way the supplier's calculate the cost to us is based on an archaic, inflexible model. Despite all the technology at their fingertips to balance power costs, their model charges us based on the most expensive energy production.
If we look at the energy production right now, we are generating 10% of our electricity requirements using gas powered stations. That's a low figure for reliance on fossil fuel. Currently 60% of demand is being created by wind -- the cheapest form of energy production.
Do we, the consumer, enjoy that saving? Not a jot. The cost of your electricity is always based on the highest generation cost... Gas.
Whether the nation consumes only 10% gas, or needs 80% to meet demands, we always get charged the same. Let that sink in for a moment.
There is absolutely no flexibility in the billing process. On a windy day, someone somewhere in corporate is smiling as they reap the benefits of cheaper production but everyone still pays the flat, higher rate.
Putting that into some real numbers, based on how we are billed -- kilowatt hours (kWh).
- Generating cost are currently 5p per kWh
- We are being charged around 29p per kWh
Even at its peak recently, in the last few weeks, generating costs
were only 12p per kWh.
It's worth pointing out that I am over-simplifying the energy network. There are a lot of factors to consider: energy transportation; the grid infrastructure; fluctuating prices need balanced; energy providers buy (commit) to energy costs months in advance; government taxes; pricing caps set by the government.
However, I believe the current system is flawed for today's dynamic and
technology supported world. It can not be beyond the realms of
possibility to have a more flexible, consumption -v- generation focused
pricing structure.
Notes:
- My prices and consumption figures are based on live data from the National Energy System Operator's data.
- I use the term 'UK' for simplification, however Northern Ireland has different operational data, so technically I refer only to Great Britain.