A new price cap by regulator Ofgem means a typical home will pay £1,923 a year from October for energy.

An annual energy bill for a typical household will fall to £1,923 in October under regulator Ofgem’s new price cap.

I honestly think it’s appalling that they’re continuing to let these energy providers make obscene profits from us.

  • HelloThere@sh.itjust.worksEnglish
    2·
    1 year ago
    • Why are you linking to a definition of economic viability for buildings? The main cost of traditional fossil fuel based electricity generation is the fuel source, over lifetime, not initial construction
    • Higher returns due to high average costs certainty attract investment - I said as much in my first comment
    • I agree with disconnecting prices from last generator, and that it will reduce inflation, because it would reduce the average price, all else being equal
    • A lower average price would extend payback periods which may discourage investment when compared to the current pricing model, again all else being equal. This is a difficult comparison because it would presume an ability to choose between the two payment methods, which you can’t.
    • We are still talking about average prices, over time, which again is different to spot prices, and both above points are further proof that your original statement of renewables being economically inviable is incorrect.
    • Bernie Ecclestoned@sh.itjust.worksEnglish
      1·
      1 year ago

      Because capex is capex. Buildings, solar, windmills. Doesn’t matter. All that matters is capex roi and opex unit per watt

      We are still talking about average prices, over time, which again is different to spot prices, and both above points are further proof that your original statement of renewables being economically inviable is incorrect.

      Now go read this and tell me that capex doesn’t matter

      https://www.bbc.com/news/uk-england-norfolk-66263340

      • HelloThere@sh.itjust.worksEnglish
        1·
        1 year ago

        I’m done here, you’re clearly not reading what I’ve said if you genuinely believe I’ve said capex never matters.

        • Bernie Ecclestoned@sh.itjust.worksEnglish
          1·
          1 year ago

          I said - Renewables are only economically viable because the cost of power is paid on the last generator, which is natural gas.

          You said - This is not true, renewables are economically viable at much lower prices than fossil fuels because their next unit cost is effectively zero

          And yet I show you sources where increased capex costs are making renewables economically unviable because the capex costs have increased so much due to inflation and the wholesale price they were offered at auction is now not enough to justify the CAPEX to build it.

          You’re going in circles because you won’t admit that the horse comes before the cart. You can’t get to zero extra unit cost if you don’t build the fucking thing.

          • HelloThere@sh.itjust.worksEnglish
            1·
            1 year ago

            I explicitly covered this in my 3rd comment - quoted below.

            Capex payback is important when businesses are evaluating building new generation. The spot price at 1am on a random Tuesday has nothing to do with whether you’re choosing to build new infrastructure. What does matter is average unit prices, over time, not one data point.

              • HelloThere@sh.itjust.worksEnglish
                1·
                1 year ago

                This is a fair point - peaking is more complex, especially if we’re considering batteries where their generation cost is going to include probabilistic opportunity costs - ie how confident are they that the price won’t fall further and/or if this is the peak of the spot and best time to sell.

                But yes, over the decades you’d be looking to run to utility for, you’re looking at blended averages to calculate the return.

              • HelloThere@sh.itjust.worksEnglish
                1·
                1 year ago

                My good fellow, if you believe that cap and floor contracts somehow disproves my point, then you really do need to go back and re-read what I’ve been saying all along, not just what you think I’ve been saying.

                For the final, final time:

                • Both types of generation have the same capex payback considerations, which will be spread over the expected lifetime of the project.
                • To be crystal clear, I am not saying the literal cost is identical, obviously the actual Pounds and Pence cost of 1 small onshore windmill is different to 1 massive offshore windmill or 1 CCGT.
                • Capex costs do not change day to day due to whether you are generating or not because they are, by definition, unrelated to operation.
                • Prices fluctuate throughout the day, and may go up or down between when you start generating and when you stop.
                • The input ‘fuel’ used by solar, wind, and tidal to generate is free, which significantly reduces their Next Unit Cost compared to fossil fuels or storage, which is the key Opex cost when considering whether to generate at a specific time on a specific day.
                • Your ability to generate also changes. If you run a solar park and the price is sky high, but it’s 10pm in December, tough.
                • If the gas you’re burning, or the stored power you’re realising (batteries, pumped hydro) cost more than the current price you’d be paid, then it is extremely unlikely that you’re going to do it.
                • Cap and Floor contracts, which specify a maximum and minimum price you can be paid, merely put limits on how much money you can make on each unit sold
                • This means that, all else being equal, renewables are able to operate profitability at lower market prices compared to fossil fuels
                • As all else is not equal, the viability of a project is based on the projected difference between average costs, including capex payback, and average price.
                • These factors must be considered regardless of means of generation - the price of each factor will again obviously be different
                • The difference between average cost and average price is your profit margin / return on investment
                • The higher the floor relative to projected market price, the easier it is to operate profitability
                • The lower the cap, the harder it is
                • The closer your projected unit price and projected costs are, the less profit you’ll get and the less viable the project is

                Again:

                • the choice to generate on a specific Tuesday at 1am is based on the price you’ll be paid, versus Opex, on that day
                • the choice to build the generator in the first place is based on the projected profit from lifetime costs versus lifetime earnings

                I will only reply if your next comment actually brings something new to the conversation.

                • Bernie Ecclestoned@sh.itjust.worksEnglish
                  11·
                  1 year ago

                  You’re talking about existing infrastructure, I’m talking about net new capex, so we’re talking at cross purposes and it’s dull

                  Cya

          • MidgePhoto@photog.social
            0·
            1 year ago

            @bernieecclestoned @hellothere
            Renewables are viable because they produce electricity cheaper than combustion, and because combustion will be restricted and banned in various conditions as time goes on.

            We used to think peak oil would be more of a problem, but previous oil is the compelling problem.