Energy bills could rise as much as 50% in the spring as the UK faces a “national crisis” over soaring wholesale gas and electricity prices as renewable generation has slumped helped by the lowest Scottish wind speeds of this century.
The trade body Energy UK has called on the UK government to intervene to help cut the cost of bills amid predictions that the price cap could easily exceed £2,000 a year.
It comes as the Herald can reveal that fossil fuel generation is soaring fuelling further concerns over whether renewable energy can replace oil and gas to keep the lights on in the nation’s homes in the medium term.
Good Energy and EDF have added their weight to calls for the Government to urgently intervene after the cost of gas in wholesale markets rose by more than 500 per cent in less than a year.
Emma Pinchbeck, chief executive of Energy UK, described the situation as a ‘nationwide crisis’.
“Domestic energy prices are going to go up 45% to 50% in the spring,” warned Emma Pinchbeck, the chief executive of Energy UK.
“It is looking pretty serious for the spring. This is a system-wide issue now. We are asking for the Treasury in the UK to intervene as others have [in Europe],” Pinchbeck said.
The energy crisis has deepened across Europe as a shortage of natural gas, nuclear outages, declining wind power output, and cold weather boosted prices. An unusually calm summer meant wind turbines produced less electricity, so fossil fuel power plants had to burn more than normal.
The Herald can reveal that a Department for Business, Energy and Industrial Strategy analysis shows that renewable power generation continues to fall to its lowest value in four years.
Energy consumption data for July to September shows renewable generation was down 17 percent on the same quarter last year. It is a sharper drop than in April to June when it fell 9.6%.
It has been driven by huge 30% drop in wind generation which were substantially below the 10-year averages. It too is a sharper drop than in April to June when there was a 14% decline.
The share of fossil fuels increased to 44.8 per cent, 2.5 percentage points up on the same quarter last year.
Renewable generation share fell to 35.9%, the lowest for four years, helped by a 30% drop in wind generation on the same period last year “as wind speeds dropped to their lowest level this century”.
The UK’s price cap on energy bills which stops companies from immediately passing rising costs on to their customers is due to change on April 1 when the industry regulator Ofgem is set to raise the cap dramatically.
While energy wholesale prices continue to climb steeply, the UK’s price cap on energy bills stops companies from immediately passing those costs on to their customers.
Since October 1 the price cap, set by the industry regulator, Ofgem, has been set at a record £1,277.
In Scotland some 1.5m Scots householders saw their energy bills soar by up to £139 in October after the last price cap hike.
Households that use a default energy tariff to buy their gas and electricity received the sharp increase.
The sharp 12% rise was driven by a surge of more than 50% in wholesale fuel costs with gas prices hitting a record high as global economies recover from the COVID-19 crisis, according to Ofgem.
Nigel Pocklington, chief executive of Good Energy – a small renewable energy firm, said the UK is facing a “national crisis” after recent rising prices created “an extremely difficult operating environment for every business in the industry”.
EDF Energy has also warned the Government must act immediately to support customers.
Ms Pinchbeck said that only about a fifth of a consumers’ energy bill in the UK is in the control of suppliers. The government sets other costs such as VAT and green energy levies, which could be reduced to help domestic customers.
More than two dozen energy suppliers have gone bust since the start of September, putting thousands of people out of work and leaving millions of homes in limbo as they wait for a new supplier.
The most significant collapse to date has been Bulb, once an energy success story which fell into administration last month.
It comes as the trade association Oil & Gas UK warned about the importance of maintaining natural gas reserves with demand soaring partly due to low winds, cold weather and issues with Russia cutting the gas it supplies to Germany.
In the UK the weather conditions meant 62% of the nation’s electricity was being generated by gas on Monday compared to a normal level of about 40% and it is believed this may increase as the weather bites.
About five percent more was being generated by coal after some of the UK’s remaining coal-fired power stations had to be fired-up to fill the energy gap.
Another 8% of the nation’s power was being imported, mostly from Belgium, the Netherlands and Norway, according to data from the National Grid.
Scotland relied on more nuclear power to generate its electricity than any other UK nation in 2020, official Government data has revealed.
According to the World Climate Service June and July 2021 was the least windy period since at least 1960 in parts of Ireland, the UK, and the North Sea.
And it said for the year to date, Scotland’s area-average wind speed has been 12% below the 1991-2020 norm implying a more than 30% reduction in output from the UK’s 11,000 wind turbines over the nine-month period of this year.
The latest UK government trade figures show that the UK’s dependence on Russia is also increasing. In the year to the end of June this year, the UK spent £3.2 billion importing Russian oil and another £524 million on imported Russian gas.
France, usually, an exporter of power, has been desperately seeking imports and even restarted fuel-burning generators as the country’s top power utility, Electricite de France SA, halted four nuclear reactors accounting for 10% of the country’s nuclear capacity, straining power grids as the continent copes with cold weather.
Some 30% of France’s nuclear capacity will be offline in the coming weeks. Germany will lose about half its nuclear capacity next year.
Germany’s power output from thousands of wind turbines has plunged to five-week lows as cold weather strains the grid.
Scots ministers have already been criticised for a failure over its 2020 ‘green capital of Europe’ revolution which has produced as little as five per cent of the low carbon jobs it forecast.
While the Scottish Government was predicting 11 years ago that there would be 28,000 Scottish jobs in the offshore wind industry alone by 2020 as the nation takes advantage of its benefits – latest workforce data for 2019 showed it stood at just 1400.
Onshore wind’s share of total electricity generation has in the past year slipped from 10.9 per cent to nine per cent, while offshore wind has dipped from 9.1% to 6.1% .
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