This project won't do anything (as you likely already know). The reason electricity is so expensive is because it's tied to gas prices, which is an entirely political decision.

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xnorswap 6 days ago | parent | next [-]

Isn't the price tied to the marginal price, rather than the price of gas?

Even if they're typically the same, because CCGT is the best for on-demand generation, flattening the demand curve ought to slightly reduce that marginal cost.

I've seen the UK generation market attacked quite a lot lately, but to me it makes sense to price everything at the marginal cost, and doing so also helps encourage capital investment in generation that can have lower generation costs themselves, because the marginal cost is only slowly impacted rather than a boom and bust model.

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chippiewill 6 days ago | parent | next [-]

I agree, although I think one of the disadvantages in the UK is that the suppliers aren't paying the cost for their own volatility. A renewable supplier can add 1GW supply to the grid, but 1GW of natural gas generation capacity is still required.

Fixed costs and capital costs end up being shouldered by the consumer which ironically ends up pushing overall costs up.

	▲	lokeg 5 days ago \| parent [-]
		This can be alleviated by the gas plant operator selling call options, effectively paying them for being reliable. The relevant keyword is "capacity markets".

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justincormack 6 days ago | parent | prev [-]

Yeah we still need some more renewable capacity (and transmission) before gas usage can go to zero much of the time (which will need more batteries to deal with short term fluctuations). Right now we are using around 10% gas, which is a decent amount. Prices are still going negative at night some of the time, like last night.

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ZeroGravitas 6 days ago | parent | prev | next [-]

Batteries will reduce the number of times gas sets the marginal price, so they will have a near immediate impact on that.

They'll also likely reduce the balancing costs by relieving congestion.

Probably too small to notice among all the other costs and changes, like deploying more renewables and starting to pay in advance for new nuclear.

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tomatocracy 6 days ago | parent | prev | next [-]

The current marginal market price is not the same as the current average price being paid for all electricity delivered. A lot is delivered via fixed price arrangements of one sort or another (CFDs, PPAs, etc) and then there are things like the Balancing Mechanism which is paid as bid, and capacity payments which are outside the marginal cost per kWh part of the system.

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mytailorisrich 6 days ago | parent | prev [-]

Gas prices are a political decision, too in Europe. For demand to reduce and for other sources to be more competitive prices have to be and remain high.

In the UK I believe it is policy for electricity prices to be high in general for thse reasons and to encourage lower usage.

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skippyboxedhero 6 days ago | parent [-]

Retail energy prices are subsidised. It isn't policy to encourage lower usage, the government is paying billions to sustain retail consumption (and yes, this is whilst another part of the government is driving prices higher).

The issue in the UK is that we moved to renewables that can't produce energy at the margin, marginal prices are still driven by gas, and we simultaneously decided to shut down large amounts of non-renewable sources of energy to satisfy the ambitions of politicians.

Result? Highest energy prices in the world, most energy-intensive industry shutting down, and massive reliance on political direction/regulators by industry (the original comment is not right, since the mid-2010s energy companies have been directed day-to-day by the state, invest in this project, don't do this anymore, etc. Our policy is made by people who wish the world was a certain way, reality doesn't matter to them).

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mytailorisrich 6 days ago | parent | next [-]

It is policy to encourage lower usage, like it is policy to keep prices up (both production and the grid are a shamble, not to mention climate commitments on top). Maybe the policy isn't publicly stated but actions speak louder than words. Of course this isn't popular so, at the same time, the governments takes measures to appear to try to keep prices lower. It is a political balancing act and subsidies are not incompatible with a policy of encouraging lower usage.

It's the same as they are doing on immigration: They say they want to lower it but the actual policy is to keep it high. People have understood that now, which explains in big part the Conservative wipe out. Labour is now on the same path.

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tonyedgecombe 6 days ago | parent | prev | next [-]

> Retail energy prices are subsidised.

Retail electricity is taxed in the UK.

	▲	youngtaff 6 days ago \| parent [-]
		But that’s OK isn’t it - if we tax it people should use it more efficiently

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HPsquared 6 days ago | parent | prev [-]

We are all just paypigs, after all.