Why are UK energy prices so high?

 Why is energy in the UK so expensive?  It's currently contributing to the de-industrialisation of the UK economy and the demise of pubs.  Our energy is even more expensive than broken Germany.

Part of the reason is the hidden stealth taxes in the form of the Green Levy. 16% of electric bills and 5.5% of gas bills.  This money is given to companies like Siemens to subsidise wind turbine construction.

The argument currently goes that renewable energy is cheaper than non renewable yet our bills are higher than pretty much anywhere in the world. This high energy price means chemical plants, steel plants, data centres are not economic if they are located in Britain.  

Pubs and restaurants are closing due to a combination of high energy prices and high labour costs.

Yet consumers are subsiding renewables through the Green Levy. As renewable output increases it means that the business case for energy which provides consistent output (base load) eg nuclear becomes more volatile.  That energy is valuable when it's dark and no wind so zero renewables output but not valuable when it's sunny and windy.

Basically the "energy market" with spot prices makes energy prices more volatile.

So the best way to strip out the noise of the market is to look at guaranteed rates.  These are rates that the energy producers are paid regardless what the market is doing.

Nuclear                  £128/MWh

Offshore wind        £113/MWh 

Gas power station    £75/MWh

Gas to the home        £29/MWh                       

So clearly Gas power stations are the cheapest.

But the contract Wholesale prices are  £79/MWh - who is losing all this money?

The capped consumer price is currently 26.35p/kwh = £263.50/MWh.  The 16% Green Levy is included in this price (yes you pay VAT on the Green Levy) so let's take that out  - that gives us £221.34/MWh.  Still there's clearly plenty of margin in the system. It seems the middle men are the ones making the money !

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