Q2 2022: IntroductionDownload PDF
Dr Iain Staffell, Professor Richard Green, Professor Tim Green and Dr Malte Jansen – Imperial College London
After a 12 month hiatus Electric Insights is back, relaunching into one of the most turbulent times in Britain’s electricity system’s history. Our first article focuses on the cost-of-living crisis that is engulfing the nation, and the central role played by energy prices. The wholesale cost of coal and gas have risen to 5-10 times their usual levels over the past two years, and as gas is the largest source of electricity production, the cost of power has shot up too. These price rises have made their way into consumer bills, bringing extreme hardship for households, businesses and industrial consumers alike.
These huge price rises have sparked intense debate about whether energy markets are fundamentally broken, who is profiting from the crisis, and should they be allowed to? Our second article explores whether renewables are being paid more than they should, and the government’s Review of Electricity Market Arrangements which is exploring these topics.
These problems are not just limited to the UK: energy prices have been spiralling upwards across the whole of Europe. Several factors are colliding on the continent, including gas shortages in Germany and prolonged nuclear outages in France, meaning Europe’s power systems are facing additional pressures. So, despite British electricity being more expensive than ever, it is cheap in comparison to our European neighbours. Our third article details how Britain has become a net exporter of electricity for the first time in 10 years, with 5% of the electricity generated here sent abroad over the last three months. This comes at a time when Britain’s energy security is becoming a cause for concern.
This situation has been complicated further by the extreme weather affecting the UK and much of the world. This summer saw a series of unrelenting heat waves, with temperatures soaring past 40°C for the first time ever, coupled with the driest start to the year ever recorded. We examine how the extreme heat has impacted electricity demand and supply, and the longer-term implications for the power system.
The price of fossil fuels over the last three years, relative to their averages from 2010-19