How UK household ele lectric icity pric ices compare to other - - PowerPoint PPT Presentation

What’s in a bil ill? l? How UK household ele lectric icity pric ices compare to other countrie ies

Dr Dr Rob

• b Gross & Dr

Dr Phil il He Heptonstall ll, Im Imperial Coll College UKE KERC Tech echnology and Polic

• licy Asses

essment 30 30th

th Oct

ctober 2018

@UKERCHQ @CarbonConnectUK

@UKERCHQ @CarbonConnectUK

• 13.30 – 13.35: Introduction
• 13.35 – 14.00: Presentation of key findings
• 14:00 – 14.05: Comments from Chair and

introduction to panel members

• 14.05 – 14.25: Response from panel members
• 14.25 – 15.05: Questions from the floor
• 15.05 – 15.10: Wrap up from Chair

Agenda

Technology and Policy Assessment

• A core function of the UK Energy Research Centre since 2004
• Provides independent, policy-relevant assessments

addressing key issues and controversies in energy

• Develops accessible, credible and authoritative reports

relevant to policymakers, other stakeholders and wider public debate

• Approach based on a systematic search and appraisal of the

evidence base, synthesis, and expert input and peer review

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Why ask this question?

A perception that UK bills/prices are high and that policy is to blame:

‘UK electricity and gas networks making ‘unjustified’ profits’ – FT, July 2017 ‘British Gas warns energy policy weighs heavily on bills’ – FT, August 2017 ‘UK power distributors criticised for ‘huge’ profit margins’ – FT, September 2017 ‘UK energy bills rising at fastest rate since 2014, data reveals’ – Independent September, 2017 ‘The cost of energy is too high, and higher than necessary to meet the Climate Change Act (CCA) target and the carbon budgets’ – Helm Review, October 2017 ‘UK industry pays 33% more for electricity than rest of Europe’ – FT February, 2018 (coverage of the UCL ‘UK Industrial electricity prices: Competitiveness in a low carbon world’ report) ‘Britain's big igges est en ener ergy com

• mpanies have

e announced price rice in increa eases th this is yea ear, citi citing high igher whole lesale price rices and th the e cos

• st of
• f government polic
• licies

es to

• support renewable energy generation’ – Reuters, August

2018

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Fin indings

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The evidence base

• Good grey literature analysis available on how policies

impact on prices/bills

• Notable UK examples from BEIS, DECC, CCC, and Ofgem
• Similar (though some less detailed methodologically) analyses also available

for several other countries e.g. Swedish Energy Markets Inspectorate, Australian Energy Regulator

• Good data available from Eurostat, IEA, CEER
• Limited academic literature on bills/consumer impacts
• Focus tends to be on carbon policy, cost of carbon, aggregate cost

effectiveness of policies, impacts on wholesale prices, response to consumption data, bill feedback, WTP studies, rebound effects

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Overview: UK relative positions on costs

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Derived from Eurostat 2017

Overview: UK relative positions on costs

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Derived from Eurostat 2017

UK gas prices relatively low

Overview: UK relative positions on costs

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Derived from Eurostat 2017

UK electricity prices relatively high (but below EU15 median)

Overview: Total policy cost comparisons

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Data from CEER 2017

Overview: Total policy cost comparisons

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Data from CEER 2017

UK has higher than average share of electricity receiving policy support

Overview: Total policy cost comparisons

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Data from CEER 2017

Overview: Total policy cost comparisons

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Data from CEER 2017

UK cost of policy support per MWh below EU average

Overview: Total policy cost comparisons

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Data from CEER 2017

Overview: Total policy cost comparisons

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Data from CEER 2017

UK cost of policy support per MWh of supported electricity well below EU average

Domestic consumers: UK vs Germany, France, Sweden

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• Values are per kWh in nominal € (i.e. not inflation

adjusted)

• Eurostat Band DC: 2,500 kWh < Consumption <

5,000 kWh. This covers average domestic consumer values from BEIS and Ofgem, and the typical central values for Elexon profile class 1 (i.e. standard domestic consumers)

Domestic consumers: UK vs Germany, France, Sweden

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• Values are per kWh in nominal € (i.e. not inflation

adjusted)

• Eurostat Band DC: 2,500 kWh < Consumption <

5,000 kWh. This covers average domestic consumer values from BEIS and Ofgem, and the typical central values for Elexon profile class 1 (i.e. standard domestic consumers) Germany has highest cost per kWh UK similar to other selected countries

Domestic consumers: UK vs Germany, France, Sweden

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Domestic consumers: UK vs Germany, France, Sweden

@UKERCHQ Germany has largest taxes and levies share Sweden has largest network costs share UK has largest energy and supply costs share, and smallest taxes and levies share

Domestic consumers: UK vs Australia

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• Values are per kWh in nominal € (i.e. not

inflation adjusted)

• For UK, Eurostat Band DC
• For Australia, ‘national’ data from

Australian Energy Regulator

Domestic consumers: UK vs Australia

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• Values are per kWh in nominal € (i.e. not

inflation adjusted)

• For UK, Eurostat Band DC
• For Australia, ‘national’ data from

Australian Energy Regulator UK and Australia costs similar, year-to-year variation largely exchange rate driven

Domestic consumers: UK vs Australia

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Domestic consumers: UK vs Australia

@UKERCHQ Australia network costs very high, green schemes costs very low

Domestic consumers: UK vs Australia

@UKERCHQ UK/Australia taxes and levies/green schemes shares moved in opposite directions 2014-2016

Key messages

• Domestic electricity prices are higher than many EU countries - but not amongst the highest

(around the median of those in Western Europe)

• Countries make different choices over which categories of consumer bear which costs, and differ in

terms of resources, the mix of power stations, and network costs - caution required when making comparisons

• Significant differences in price breakdown between countries, even for those with broadly similar

total prices

• Wholesale energy and supplier costs together make the biggest component of UK domestic

electricity price

• UK policy costs are the lowest amongst the EU study countries
• Total UK low-carbon policy support costs per MWh are below EU average, despite above-average

share of electricity that receives support

• Plethora of policies (both current and past) and taxes, conflation of social policies and low-carbon

policies, and of policy impacts with concerns over market structures, charging regimes and supplier profit margins

• Complexity allows different stakeholders to interpret and represent the facts differently, or select

different subsets of those facts

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Panel Dis iscussion

@UKERCHQ @CarbonConnectUK

www.ukerc.ac.uk

@UKERCHQ @CarbonConnectUK

• 13.30 – 13.35: Introduction
• 13.35 – 14.00: Presentation of key findings
• 14:00 – 14.05: Comments from Chair and

introduction to panel members

• 14.05 – 14.25: Response from panel members
• 14.25 – 15.05: Questions from the floor
• 15.05 – 15.10: Wrap up from Chair

Agenda