Comment by ghighi7878

Exactly, and the Tories banned onshore wind, and refused to really invest in offshore wind. We've got the North Sea and its perfect for wind farms we should have had for decades

Why would additional storage make a significant difference to the price of gas?

The study you have linked is completely wrong.

There is no international market for gas because export/import is physically complex. This is why gas is priced very differently despite it being chemically similar (unlike oil). Anyone who says anything different should be immediately disregarded as someone who should not have an opinion.

This is technically true for oil but there are two other factors. One, importing oil is environmentally-intensive and relies upon the assumption of free and open trade in oil...hopefully, the last few weeks have demonstrated why this is untrue. Two, the assumption is that mix of imports is not changing, because of high energy costs and reduction in North Sea production, UK refineries are shutting down so we are completely losing domestic capacity across the whole space. We aren't importing oil, we are importing refined products, losing domestic chemicals capacity, losing margin. Lower jobs, lower tax revenues, more reliance on imports.

The above take would be somewhat funny if we weren't ten years into seeing the consequences of this. At this point, we could be back to the stone age and you would have the same people screeching that inventing fire is dangerous (I worked in equity research in the mid-2010s...I remember when Cameron was really pushing hard for this, Clegg was saying how expensive nuclear is, etc. people in the industry were saying this would very badly...the issue is that the political cycle is far shorter than the economic cycle, all of this stuff is obvious but people in the UK run on the political cycle so if it isn't the newspapers, no-one normal reads them, next week then it will never happen...same issue with housing, exactly the same thing happened, we are now subsidising retail electricity which is impossible to get out of, I remember specifically this idea was thought of as an insane impossibility but producers were saying it would have to happen, and giving huge subsidies to producers...this is all obvious, obvious things happening are obvious, producers were fine, they get paid the subsidies but consumers are getting shafted AND consistently voting to get shafted).

Also, Roughs storage facility is in the sea...so I am not sure what "real estate" development was done here (the UK has been building 10-20% of the required growth in housing stock for something like two decades...again, the same people will be screeching about developers if we lived in caves). The reason it was closed was due to economics.

For some reason, you deny that producing more gas would be useful but are outraged at a storage facility closing when the primary function of a storage facility is to allow energy producers to arb derivatives markets effectively. I have no idea how this makes sense to you based on all of the above...perhaps you just want to complain about the Tories? I have no idea.

The current tax rate on North Sea production is 75%, there was ample opportunity for public benefit but multiple governments took that money and spent it on benefits. The reason why Norway has worked is because they incentivized exploration (again, something that you imply later would have no benefit...but okay). The policy of the last fifteen years has been to tax the industry heavily and disincentivize exploration. Revisiting this approach is extremely unpopular amongst all politicians which is why production has dropped. Even with this limitation, we have large gas fields that have been blocked (by the Tories btw) for environmental reasons.

This isn't complicated: if you want more oil and gas, produce it and create more incentives to produce it. The reality is that people want to have their cake and eat it: North Sea production is both very pointless but paying huge amounts of carbon to import from the Middle East is a good idea and we have to pay subsidies of 30-40% electricity bills to subsidies green production...which is also very profitable but requires subsidies because of Tory developers or something.

The UK isn't a serious country. What is happening to the UK is a reflection of phenomenally poor political leadership. It is deserved.

Is gas expensive though? It's like 6p per kWh at the moment with electricity about 25p per kWh for consumers.

I think gas is dirt cheap, heating your home and hot water with electricity is 4x more expensive and costs hundreds a month.

> Gas in the UK is expensive because of 1980's privitisation

Post privatization domestic gas production rose 900%. Increasing supply = cheaper prices. Prices were low and stable at the time compared to today:

https://commonslibrary.parliament.uk/research-briefings/cbp-...

This claim is the sort of dangerous ideological nonsense that is so common in Britain, and which has wrecked it. Literally every time socialist policies fail people come out of the woodwork to blame privatization, and yet invariably this made things better despite an often botched process. The American oil/gas industry is fully private and yet they have much cheaper energy: blaming Thatcher is dumb and not the answer.

Gas in the UK is expensive because successive British governments wanted to have nothing to do with it and did everything they could to crush the suppliers. They thought deliberately deindustrializing the country was moral and ethical, for "climate" reasons. So they:

• Imposed massive "windfall" taxes on the industry to the extent that nobody developed new sources

• Then imposed very high carbon prices on it

• Banned fracking

• Stopped issuing licenses for exploration

• Imposed price caps

• Chased all the industry that needed cheap energy away to Asia

• Shut down gas storage facilities, exposing Britain to the global spot price

• Didn't build other reliable energy sources like nuclear or coal

End result: high prices and shortages. There are graphs here that show how much of the British electricity price is artificially created by government:

https://davidturver.substack.com/p/why-is-my-energy-bill-so-...

Other countries didn't make all these mistakes together. And they were mistakes by the government. Really, can you even claim the British energy industry is private when the government takes 80%+ of its profits? Socialist policies always create shortages and high prices. Always.

The UK (and Europe) could produce much more gas and consequently control prices if they wanted. It is easy to always blame the previous government(s) but the current situation is policy across Western Europe.

Edit: puzzled by the blunt downvotes for stating a noncontroversial fact. Over the last 15 years the US has invested in shale gas while the UK and EU have banned it. Even today the UK refuses expension of North Sea gas extraction. Whatever the reasons (environment, decarbonisation) it does mean that the situation we have now with gas across Western Europe is policy, not an unfortunate consequence of world events...

Why is it "people are willing to pay" and not "corporations are brazen enough to charge"? These utilities are necessities and relatively few people have access to cheaper alternatives to them.

PG&E's prices are not a function of what people will pay though, it's a function of what people expect.

CA wants green energy now (aggressive targets), needs to have fire hardened infrastructure (expensive upgrades), and wants full service to sprawling remote areas using modern infrastructure.

The combination of these is incredibly expensive.

If you don't believe me, buy PGE stock and get your dividend from their "greed". But honestly, the stock is an awful performer, because the actual problems facing them are real.

> In the last few years California runs 100% renewable on many days (and growing) every year.

How many is "many days"? Gas is still used for at least one fifth of electricity. https://app.electricitymaps.com/map/zone/US-CAL-CISO/5y/mont...

I know nothing about California so please correct me if I'm wrong.

You mention significant hydro and solar capacity in California. So minimal carbon externality: lung disease and climate change. If you consider that externalised cost into the cost of electricity elsewhere, does not California and other renewable-rich electric grids fare more competitive on price?

E.g. the problem is not the expensive renewables in California, rather, the problem is that the cost of declining human and animal health and climate change is externalised for the fossil fuel.

Meaning it's supply. Overall dupply low because fossil fuels discouraged and penalized, demand high, price high.

You could solve that with a stroke of a pen, by re-nationalizing.

California has high volumetric rates, but mostly that is because it has much more distributed generation than any other state, uses far less grid power, so the grid rates are dominated by fixed grid costs. Actual monthly electric bills in California are not remarkable at all. According to the EIA the typical residential electric bill in California is almost exactly the same as Texas: $174.59 vs. $173.94.

Unfortunately for the UK, its geology means there isn't a lot of pumped hydropower storage unlike France, which is the cheapest way to bank intermittent renewables. In the places where there is pumped hydro capacity like Coire Glas, the operators are demanding the government guarantee they would be paid today's (natural gas generated) price to go ahead with construction, which would completely defeat the purpose of energy storage.

And yes, letting nuclear power dwindle was a political choice, spurred by short termist bean-counter thinking:

http://www.stross.org.uk/charlie/old/rant/torness.html

Seems like a very good case to get storage and power backup in people's homes. Industrial users could install their own gas fired generators. Residential consumers could have simple battery based backup, or even a generator which would double for helping during powerouts.

> Doesn't this mean that solar/wind are insanely lucrative?

I used to work in wind energy in the Netherlands, it is only profitable there due to government subsidies. It was/is an enormously complicated system to understand on the whole. I was on the environmental impact side (visualizations) during the permitting process. It's high-risk & enormously expensive during the permitting process (i.e. getting permission to build the wind farm), and beyond that I understand it's a bidding process and again, super complicated on the energy trading side once you're operating. My experience was that the wind farm operators seemed to be doing well financially, but insanely lucrative? I'm not sure about that vs. non-renewables. Everyone I worked with (including myself) believed in green energy as a part of a larger mission to make the world a slightly better place. EU directives on renewables is what pushed the mission forward; the dutch on the whole (surprisingly), do not love wind turbines in their back yard.

Yes, and I think that’s actually intentional, they’re rewarding renewables way over the odds without needing to give politically controversial benefits. The rewards are just an inherent result of the existing system. This is why renewables are growing rapidly in the uk.

Of course we’ll need a way to resolve fluctuations both rapid and slower. Rapid fluctuations are handled by pumped hydro and increasingly by batteries.

The slow fluctuations (day/night all the way to summer/winter and good/bad weather patterns) are much trickier, I think it’s still unclear how well handle them, but it will certainly be partly handled by having an excess of renewables, though we’ll likely need some other solutions too, nuclear is probably one of them.

> Doesn't this mean that solar/wind are insanely lucrative?

This is how markets are supposed to work. It provides an economic incentive for production to increase, which is what we want.

Consider what happens if you develop a farming method to produce potatoes for a fraction of the usual cost, but you can only meet 10% of total demand at your local market. What price are you going to sell your potatoes for when you show up to the market? You (like any free market seller) want to maximise your return, so you'll be able to sell for a fraction under the previous market rate, undercutting everyone else. Your farming method would be extremely lucrative.

Not only is it insanely lucrative, but the government enters into "contract for difference" contracts that guarantees a price per MWh that are generally above market rates, taking out most of the financial risk.

There is. The cost of my electricity changes every half hour.

People disliking renewables always say this.

Then when asked what method to price in the Swedish nuclear fleet having ~50% of capacity offline multiple times last year and France famously having 50% of the capacity offline during the energy crisis I always get crickets for answers.

It’s apparently fine when nuclear plants doesn’t deliver, but not renewables.

The difference with renewables is that it’s even easier to manage. Their intermittency is entirely expected and the law of large numbers ensure we never have half the capacity offline due to technical issues at the same time.