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 ob Gross & Dr Dr Phil il He Heptonstall ll, Im Imperial Coll College UKE KERC Tech echnology and Polic olicy Asses essment th Oct 30 th 30 ctober 2018 @UKERCHQ @CarbonConnectUK

Agenda 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 • @UKERCHQ @CarbonConnectUK

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 @UKERCHQ

@UKERCHQ

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 ompanies 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 ost of of government polic olicies es to o support renewable energy generation’ – Reuters, August 2018 @UKERCHQ

Fin indings @UKERCHQ

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 @UKERCHQ

Overview: UK relative positions on costs @UKERCHQ Derived from Eurostat 2017

Overview: UK relative positions on costs UK gas prices relatively low @UKERCHQ Derived from Eurostat 2017

Overview: UK relative positions on costs UK electricity prices relatively high (but below EU15 median) @UKERCHQ Derived from Eurostat 2017

Overview: Total policy cost comparisons @UKERCHQ Data from CEER 2017

Overview: Total policy cost comparisons UK has higher than average share of electricity receiving policy support @UKERCHQ Data from CEER 2017

Overview: Total policy cost comparisons @UKERCHQ Data from CEER 2017

Overview: Total policy cost comparisons UK cost of policy support per MWh below EU average @UKERCHQ Data from CEER 2017

Overview: Total policy cost comparisons @UKERCHQ Data from CEER 2017

Overview: Total policy cost comparisons UK cost of policy support per MWh of supported electricity well below EU average @UKERCHQ Data from CEER 2017

Domestic consumers: UK vs Germany, France, Sweden • 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) @UKERCHQ

Domestic consumers: UK vs Germany, France, Sweden • 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 @UKERCHQ

Domestic consumers: UK vs Germany, France, Sweden @UKERCHQ

Domestic consumers: UK vs Germany, France, Sweden Germany has largest Sweden has largest UK has largest energy taxes and levies share network costs share and supply costs share, and smallest taxes and levies share @UKERCHQ

Domestic consumers: UK vs Australia • Values are per kWh in nominal € (i.e. not inflation adjusted) • For UK, Eurostat Band DC • For Australia, ‘national’ data from Australian Energy Regulator @UKERCHQ

Domestic consumers: UK vs Australia • 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 @UKERCHQ

Domestic consumers: UK vs Australia @UKERCHQ

Domestic consumers: UK vs Australia Australia network costs very high, green schemes costs very low @UKERCHQ

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

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 @UKERCHQ

Panel Dis iscussion @UKERCHQ @UKERCHQ www.u .ukerc.ac.uk www.ukerc.ac.uk @CarbonConnectUK

Agenda 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 • @UKERCHQ @CarbonConnectUK