Similar to the global community, the UK is grappling with the challenges posed by the ongoing global energy crisis, compounded by various factors affecting the supply, storage, and pricing of power in the country. These factors include:
Lower Renewable Energy Generation: Reduced generation from renewable sources, attributed to low winds and outages at certain nuclear power stations, has led to a higher reliance on gas in electricity production. Even if you are on a 100% renewable energy deal, the interconnected pricing system means that an increase in gas prices will impact renewable energy costs.
Fire at a National Grid in Kent: A fire at a National Grid facility in Kent disrupted a power cable between England and France, disrupting the import of electricity from the continent. Full restoration was not expected until 2023.
Low Gas Reserves: The UK faces challenges due to having some of the lowest gas reserves in Europe, making it difficult to stockpile gas for future use. The capacity is only about 2% of the annual demand, significantly lower than other European countries.
Insufficient Government Support: The Ā£15 billion government support package, which includes a Ā£400 credit to households over six months from October, falls short compared to measures taken in other European countries. France, for example, has imposed a cap on electricity price increases at 4% until the year's end.
Issues with the Energy Market: Since 2021, 28 UK energy suppliers have gone out of business, primarily due to business models ill-equipped to handle a drastic surge in wholesale prices. When suppliers collapse, consumers bear the cost through increased bills. Bulb Energy, with 1.5 million customers, was placed into Special Administration, incurring unexpected handling costs. Initial estimates of Ā£2.2 billion over two years have skyrocketed to Ā£6.5 billion, potentially adding up to Ā£200 annually to household energy bills.
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