Recent searches
Search options
⧖ If Labour had any sense they would’ve got Ed Miliband to make a move to immediately reform the electricity market so that wholesale prices aren’t largely determined by the price of gas fired generation. A bold but long overdue move would potentially halve the domestic unit rate, with an immediate win for inflation, and render the whole question of the winter payment moot. That would’ve been smart joined up strategy benefitting everyone. Doesn’t look like they’re capable of that.
@christineburns and everyone else - does anyone here know: Do the retailers contract directly with generators for the bulk of the energy they sell, with "wholesale" really meaning spot market (what they pay if the contracts fall short, which will inevitably happen from time to time with solar and wind)? That's what I'd expect and it isn't unreasonable. Or is all electricity priced that way, which would be ridiculous?
@stevehayes Retailers generally purchase energy long in advance and their liquidity relies on them being good at forecasting. If they forecast badly then, as you say, they pay the spot price to make up the shortfall. Large industrial users can contract for their own supplies. What Octopus is doing is monetising their ability to influence how we consumers timeshift our power use. I would have put these 25kWh in the car at some point but I’m being rewarded for shifting that load for the system.
@christineburns thanks. We're often given the impression that if, say, the price of gas spikes, other generators - renewables, nuclear, etc, get to charge equivalent high prices even though their costs haven't changed. Sounds like that's not the case then for most of their output which they wouldn't want subject to the vagaries of the spot market/casino.
@stevehayes Be careful at every stage to distinguish between whether we’re talking about the wholesale price charged to retailers/big users and the price the generators get paid. When you buy electricity on the spot market (as opposed to an advance power purchase agreement with a generator) there is one price for that period in time. However it is extra complicated because renewables have come into the system under a contract regime where, even though the wholesale price may be far above the..
@stevehayes ..the price they would nominally charge, they agree to pay the difference (the part which looks like a windfall) back to the grid. If that sounds bizarre then you’d be right. The whole market is unaccountably complex like that — engineered that way by the consultants who designed the market mechanisms back when electricity was privatised. Outsiders are SUPPOSED to find it difficult to penetrate. However, the bottom line is that gas generators get paid top dollar.