Domestic Electricity Prices & Wind Turbine Subsidies

Nearly nine years ago I wrote a blog post analysing the consumer electricity price differences between European countries. This was based on the table below which came from  THIS SITE.

The original post is HERE.

European Electricity Prices in 2011

The data was sobering. Especially with how the price appeared to track the level of installed wind power within the country.

I intended to update this on a regular basis but for some reason the website stopped making the data available. Eventually  I gave up trying and forgot about it.

By chance (as it is the year end) I was looking at the stats for this blog. I noticed that the old post on European electricity prices (now nearly nine years old) was still getting a fair amount of traffic.

So yesterday I went back onto the The European Energy Portal just in case they had any links to up-to-date data. The good news is that they have restarted providing the data. So now I can at least (after a delay of eight and a half years) update the original.

The readings today, after nearly nine years of rampant and virtually unconstrained development of industrial wind turbines and other RE make for even more sober analysis than before.

Here’s the new table of European electricity prices.

European Electricity Prices 2019

You will notice that the relative price between countries is virtually unchanged. Denmark still hosts the most expensive household electricity. Germany is again a close second. Sweden is today marginally cheaper than France but both have undergone significant price increases. Especially France which has politically disavowed its clean cheap and effective nuclear power in favour of yet more wind turbines.

Bulgaria still has the cheapest electricity in Europe with a virtually unchanged price. Interestingly Austria has also maintained its 2011 price.

Many European countries though have suffered large real-value increases in the price of their electricity. Often well above inflation.

The UK is a case in point. The is a period of eight years between the original post and the updated table. The price (in Euros) over this time went up from 15c to over 22c. That’s a rise of over 7c or a rise of about 50% unadjusted for inflation.

FROM HERE price inflation in the UK since 2011 to 2019 was 21%. So the rise in electricity prices in the UK over this eight year period has on average been at more than double the annual rate of inflation.

So why is this?

Maybe gas prices have gone up? (gas accounts for about one half of UK electricity generation)

No.

The gas spot price is actually cheaper today than it was in 2011, and by a considerable margin.

Is nuclear adding to the cost?

No.

In fact what nuclear there is left is now more efficient and cost effective than ever. Today nuclear power offers the cheapest electricity on the UK market.

Coal as a major UK electricity generating fuel is no more. It is a bit part player. Besides, the coal price (like the gas price) is considerably lower today than in 2011.

But there is a large new added cost since 2011 and that cost is associated with Renewable Energy.

There’s been lots of smoke and mirrors about how “cheap” wind power and solar have become but you only have to dig a little way into data to show the truth.

As the years have gone on the amount of subsidy to wind turbines you provide from your electricity bill has steadily gone up.

It is the old “boiling frog” approach to implementing a considerable price hike over time.

Disguised by the natural fluctuation of the market due to fuel price changes the price of electricity has been slowly and carefully ratcheted up over many years.

Today for every five pounds you spend on your consumer electricity bill, one pound is allocated to what is known as “Environmental and social costs”.

According to OfGem:
[quote]
These are the costs of government programmes to save energy, reduce emissions and encourage take up of renewable energy. 
[unquote]

Of that 20%, the Lions share is used provide subsidy payments to Wind turbine operators and and solar PV owners. Mostly it goes on wind turbines.

The vast majority of these subsidy payments are made through what are known as ROC certificates. This is a subsidy scheme that is now obsolete but will still impact your bill for the next 20 or so years.

The RO scheme has been replaced by an even more duplicitous (and still lucrative) scheme called Contracts for Difference. But as of today ROC payments form the majority of wind turbine subsidy.

In other words the majority of the 20% added to your bill as “Environmental and Social Costs” is the amount you pay to subsidise wind turbines and to a lesser extent solar PV.

Paltry amounts out of this 20% go to improving home insulation or to providing remote locations with electricity.

So, you may be surprised to find that your annual electricity bill shows far less of an increase than  this boiling frog price hike suggests.

This is because people now use less electricity than in 2011.

Why?

Because today we have more efficient appliances, particularly electric light bulbs, but white goods are much better too.

So just think:

All that money you spent on LED bulbs and eco-friendly washing machines has been used not to reduce your electricity bill, but to line the pockets of the big companies running wind turbines. 

And it will continue to be used in the same way for the foreseeable future.

Today for every MWh of electricity produced the generating company must provide 0.484 ROC certificates. The value of a ROC certificate in 2020 has been set at £48.78 per ROC. This cost is passed directly through to the customer.

A typical consumer uses 3.7MWh electricity per year. Maybe you use more. Maybe less.

So work it out yourself how much you are subsidising wind turbines by.

I don’t think you will be amused.

France and Germany: Electricity and Emissions

There is a question at the bottom of this post - maybe you have an answer.

The vast majority of French electricity is generated from from nuclear and hydro-electricity. There are only residual amounts of electricity generated from fossil fuels.

You can see live data on French electrical generation Here At GridWatch. Below is a snapshot taken today.

In the snap shot, along with coal at 0.01GW (0.02%) France is using gas to generate 0.68 GW (1.4%) and Oil 0.13GW (0.27%)

So in France electrical generation from fossil fuels account for less than 2% of production.

But how does this relate to emissions?

For simplicity I'll leave out the real nasties like Sulphur Dioxide and Nitrous Oxide and just deal with Carbon Dioxide. When we compare these figures with Germany (see below) the real nasties would be just about in the same in country to country proportion as the Carbon Dioxide.

From The EIA FAQs here (and a little bit of maths) we know that electricity generated from coal produces about one Tonne of Carbon Dioxide for every MWh of electricity.

Over the day, from burning coal to make electricity, France dumps 10 x 1 x 24 Tonnes of Carbon Dioxide into the atmosphere. Or 240 Tonnes

From gas (550Kg/MWh) they dump 670 x 0.550 x 24 or 8844 Tonnes.

Finally today oil (816Kg/MWh) will dump 130 x 0.816 x 24 or 2545 Tonnes.

In total today, from producing electricity from fossil fuels, France will dump 11629 Tonnes of Carbon Dioxide into the atmosphere. So say: 12000 Tonnes max.

Now let us look at Germany. To reduce emissions and do away with its nuclear fleet, Germany has invested hugely in a plethora of wind turbines and solar panels. But its generation is still dominated by coal, with no real prospect of any significant reduction.

The German daily generation data is presented as a graph and the live graph can be found Fraunhofer interactive chart here. A snapshot is below

First of all, notice that Germany is actually using the dirtiest fuel known to man as base load (thats lignite or brown coal). Also its remaining nuclear fleet still adds about 9 GW.

Useage of coal and lignite averages out over the day at around 31GW. Gas averages out at about 2GW.

Although Lignite is significantly more polluting than hard coal I'll treat it all as hard coal for simplicity. Although Oil use is significantly above that in France we'll ignore it as it gets buried in the rounding as the rest of Germany's fossils fuel numbers are so large.

31GW of coal generation will over the day, produce 31,000 x 1 x 24 or 744,000 MWh and will dump 744,000 Tonnes of Carbon Dioxide into the atmosphere. Gas produces 2000 x 0.55 x 24 = 26,400 Tonnes of Carbon Dioxide. So say 750,000 Tonnes of Carbon Dioxide in total.

So, today in the real world, Electrical generation in Germany will dump somewhere around (750000/12000) 62 times more Carbon Dioxide into the atmosphere than Nuclear France.

Of course, Germany 82.5M has a larger population than France (64.5M) So per capita the

emissions ratio is less, at about 50:1

But just think on that.

In Energiewende obsessed Germany, every time an electric kettle is boiled to make a cup of coffee, 50 times as much Carbon Dioxide is released as when a kettle is boiled in nuclear France.

So tell me, who has the more valid solution to the emissions problem?

The Crime of Economy 7

First of all let me make this clear the concept of the Economy 7 domestic electricity tariff is excellent. It is just the execution that is flawed. (Wikipedia description here)

Economy 7 is a scheme dating from the 70's. Basically the consumers electricity is provided on two separate tariffs. The daily tariff is more than the night-time tariff. The night-time tariff is significantly lower than the median price. This is because during the small hours, electricity demand is low.

At night, electricity  generated from base load generation is often barely required and much generation capacity is wound down to minimum (and inefficient) levels.  During these quiet periods, generators sell their electricity at knock down prices. The theory of Economy 7 is that consumers can cash in on these quiet periods by using cheap electricity at unsocial hours.

Initially the driving force was to provide energy for night storage heaters. They  used the surplus night time electricity to provide heat during the day. Often derided, night storage heaters do not really deserve their dreadful press. True, they do have their limitations. But night storage heaters were the first practical example of domestic energy storage - which has yet to be beaten.

The practical problem with Economy 7 is that it impacts on the huge profits made by the utilities selling it. If the electricity at night is sold at half the day time tariff, even after winding their margins up, the utilities still earn less from each KW/hr than they would from a flat tariff. Utilities don't really care if the night-time energy goes to waste. They also know that most Economy 7 customers have night storage heaters and have no choice but to use Economy 7.

To ensure their (guaranteed) profit stays as high as possible, the utilities charge Economy 7 customers double for day time electricity so the 7 hour night period price can be halved. An Economy 7 customer needs to use at least 40% of their electricity during the night period which is 29% of the day. They need to do this just to break even.

If there was any common sense to this we would all be on Economy 7 tariffs, but at fair differentials not ones dictated by greed.

More of us would use washing machines and other heavy load appliances during the slack periods. This would make better use of our available electrical resources. There would be less waste, and actually less wear and tear on the infrastructure of the grid.

But the massive profits of British Gas, RWE nPower and the others would take a (slight) knock. But no government has yet had the guts to suggest the utilities should behave responsibly.

So don't expect ground-breaking Economy 7 deals any-time soon.