Energy Prices

I understand people’s annoyance seeing the enormous profits that extraction companies are making while the average consumer faces double-digit inflation, often without any increase in their income. 

There is a difference between ‘windfall profits’ that some organisations benefit from and risk-based profits that encourage entrepreneurs to take calculated risks.  

Cautious investment (typical pension funds) like regular dividends and capital growth over a long-time scale. Some investors like to ‘take a punt on an idea early in the rollout of a plan – the potential gains can be enormous, and the losses can be sobering. Those that take the risk deserve the benefits when they come – even if it coincides with a financial depression. It has always been so and will be in future. 

My concern about energy providers is exemplified by how consumers try to do the right thing but end up subsidising everyone else. My example is the installation of Solar Panels. 

A decade ago, the benefit of installing an array costing well over £10,000 was the attraction of the Feed-In Tariff. Total generation is measured and for a set number of years, 50% would be presumed to have been flashed back to the National Grid. The installation might have fed back more or less than 50%, but the feed-in tariff was generous and attracted ‘early adopters. 

Move on a decade, installations become cheaper and battery storage reduces the amount exported to the grid. The feed-in tariff has disappeared, and the deal has changed significantly. Units exported to the grid are paid about 5p per unit (some as little as 1p). However, if you want to buy some energy from the grid you have to pay 35p per unit. 

Those properties that are self-sufficient when the sun is shining do not care because they use as much of their generated energy as they can by storing the surplus in batteries, electric vehicles, and hot water cylinders so that their consumption at night is virtually nothing, the next day repeat until the sun stops shining. 

Meanwhile, the units that automatically flash back to the grid are harvested cheaply and sold at full price to wherever it is needed – that is where the system makes a shed load of money! 

We are told that the infrastructure is up to capacity (paid for by us decades ago) yet strangely enough the export of solar and other renewable energy seldom causes as many problems as a new housing development demand – well that’s a bit odd! Maybe the new prime minister will get to the bottom of that one. 

What is the answer? If you invest in or already have a solar array, get yourself on a tariff that suits your circumstances, invest in battery storage (in the house or on the drive) and consider what appliances and heating options can use energy when it is cheaper to buy.