Electricity prices to be decoupled from gas prices in UK. The method is via switching Renewables providers on old RO contracts to newer Contracts for Differences. Enables more stable pricing.
Same as above expressed as a price ratio
A lot is said about energy prices in relationship to this war. We are many weeks from the last time gas was freely flowing from Qatar. It's starting to be possible to draw some long term conclusions.
Gas prices can be understood using Octopus' gas tracker. This is up 31% year on year which is clearly substantial. There have been some more recent declines in that price due to demand drop-off in Asia.
If electricity prices were tightly coupled you could expect a similar increase. Using average electricity tracker prices as a proxy for other contracts (flexible, etc.) we see that they've risen by 4.1%. Not a trivial amount but not a level which would be noticeable for many consumers.
What's remarkable is that this increase is only being reflected with peak-time Agile prices (4pm to evening). Almost all off-peak hours have witnessed a year on year reduction in price.
It will be interesting to see how this plays out going forward. Do we expect this price cut to be sustained over the next few months?
A lot is discussed about the coupling of electricity and gas prices. This is evident for anyone who uses Agile for the peak hours especially on a cold weekday in January.
However, there is a flip side where Agile, IOG, Cosy, etc. tariffs get very cheap off-peak electricity prices. The ~8p/kWh rate for IOG is very low compared to what the renewables generators are being paid for that energy.
When Agile prices plunge this means we can be paying less than what both ROCs and CfDs renewables providers are being paid. There's a sense that tariffs like Agile benefit immensely from the current market model with the signal pushing us to low-carbon periods by design.
What are people's insights about how any changes to our method of marginal pricing affect these smart-tariffs?
My sense is that it'd make peak-time rates (e.g. 4pm-7pm on cosy, Agile) cheaper. Would there be slots where we'd pay more?
