In a stainless steel plant on the edge of Sheffield, Christian Brüggmann's job is to keep everything running. [emphasis, links added]
Owned by Italian manufacturer Marcegaglia, the factory is the only remaining plant of its kind in the UK, producing primary stainless steel used in everything from pipes to cutlery.
However, in recent years, Brugman has been spending more and more time instead of focusing on production, but rather worrying about other things: high electricity prices.
“It has been a roller coaster journey since Covid began,” said Brugman, head of German operations at the facility.
“In a day, your price can cost £200 per megawatt-it creates too much uncertainty and is difficult to plan.”
Marcegaglia plants are more exposed than most plants.
It uses a huge electric arc furnace to melt the scrap metal and combine it with other alloys in the large pot. This mixture is then poured into a plate.
Even turning on the furnace is a promise because it triggers a production process that must last three days, regardless of electricity price fluctuations.
However, Brugman’s experience is far from unique.
Today, businesses and families complain that electricity prices seem unstoppable.
In the government's new industrial strategy, ministers view the problem as one of the biggest challenges facing domestic factories.
at the same time, Ofgem regulators warn that higher prices force more families to fall into poverty.
Energy Minister Ed Miliband blames the rise of our dependence on [natural] Gas that generate electricity. His critics claim that the government is responsible for the pursuit of net zero. …Sniper…
Looking at these numbers, it is not difficult to see why millions of people… are struggling.
Energy prices soared to compelling levels as Europe competed for natural gas supplies for heating and electricity in the Russian attack on Ukraine.
But even now in the worst case of the crisis behind us, the price is still much higher than before.
Last week, Ofgem released shocking new figures indicating that household debt violated £4 billion [$5.5B] Starting from £1.3 billion for the first time [$1.79B] 2020.
The explanation for this is very simple.
Between 2019 and 2024, wages and state pensions increased by 32% and 31%, respectively, while electricity prices for medium-sized households surged by 58%according to official figures.
For a typical household that consumes about 3,100 kWh (kWh) per year, this results in an annual electricity bill of about £930 [$1,180]starting from £589 [$810] 2019, including taxes. (The washing machine usually consumes about 1kWh of power per cycle.)
However, even the cost of moderation is increasing.
The average regular expenses for households without electricity have also jumped from around £7 in the past five years [$9.62] Less than £15 [$20.61] per month, According to Ofgem's regulator.
“There are all the taxes, and that's even worse. Without them, I'd be better.”
And, it’s not just a family that needs to swallow up a larger cost.
According to the International Energy Agency, the situation is even worse for businesses, with the highest electricity bills in UK factories.
They doubled their costs between 2019 and 2023, which is the data available in the last year.
UK industrial users paid 25.85 pence [$0.35] Taxes are included per kilowatt-hour, from 11.55p to [$0.16] Just four years ago.
Crucially, that's 45% of France and Germany, and four times what American companies pay.
David Scaife, the company's chief financial officer, said that in Marcegaglia's case, 25-30% of the spending at the Sheffield plant was directly paid. …Sniper…
High electricity prices threaten not only traditional industries in the UK, but also future industries.
Under the plan to reach net zero by 2050, electricity consumption will only become more critical as the production process is electrically employed to reduce carbon emissions.
Yet even the highest in Westminster is hard to fully explain how Britain is bound by such a cruel cost of electricity.
Industry Minister Sarah Jones asked last week about the reasons for the BBC Radio 4 PM program, and she said “will explain it all day long”.
France is cheaper, she said, because it has “a lot of nuclear power” and Germany “has historically better in terms of industrial energy prices because they have paid extra for consumer bills”.
The answer hints at the past failure of the government to build new nuclear power plants. But that doesn't mention that nearly a quarter of German power is produced by all the cheapest fuels: coal.
But another reason why Jones can’t unravel the reason is the sheer complexity of our energy bills.
They include not only the cost of power, but also numerous taxes, green taxes, and other expenses introduced over time. …Sniper…
At present, the biggest single factor affecting electricity prices is gas.
After discovering huge gas reserves in the North Sea, the “Gas Dash” of the 1990s saw a series of gas power plants built throughout the UK, and since then they have become the backbone of our power grid.
Before this, burning coal power plants were our largest source of electricity.
But in recent decades, successive governments have tried to tax it more heavily due to high carbon emissions.
Now, the rise of renewable energy has also pushed gas toward the pecking order of power systems. But because the market system calls “marginal pricing,” gases continue to affect prices.
Grid operators must always maintain supply and demand for electricity by constantly making fine-tuning.
Grid officials will work hard to decide which power plant to use every day.
They start from the cheapest, then continue until they meet demand, and eventually source energy from the most expensive suppliers.
At the end of this process, the electricity paid is not from the cheapest, but from the most expensive.
This means that even if wind, solar, batteries, and other clean power supplies provide most of the power, using gas plants to provide the final score, it is OK Each generator still receives payments from any gas plant.
“It may be that only one of these plants needs to be somewhere, but the whole country pays peak gas prices, which is crazy,” Lieburridge said.
The driving idea behind this is efficiency, as the incentive power plant owners offer lower prices, so they last longer on the generator list.
But that means consumers are forced to pay for the launch of so-called cheaper renewable energy while still paying for gasoline. …Sniper…
The introduction of renewable energy has also made us more accessible to natural gas in other ways.
We have not upgraded our power network to carry all the electricity generated by the Scottish wind farm, so when the grid becomes too crowded we are shutting down the turbines.
Meanwhile, grid operators will open gas plants elsewhere to ensure that demand is met.
This has resulted in a large amount of so-called “cut” compensation paid to wind farms, all of which are paid through family bills.
Green contradiction
Subsidies are another key driver of electricity prices.
Continuous governments have brought a variety of taxes to energy bills, from those designed to support the introduction of cleanliness capabilities to those designed to help poor families.
All of this is expensive, the Renewable Energy Foundation says, which puts the total cost of annual energy subsidies to be around £2.5 billion [$34.36B].
The origins date back to 1990, when Margaret Thatcher's government created a non-fossil fuel obligation, a tax on coal and gas generators.
Its purpose is to support the privatization of national nuclear power plants, which has created so expensive power that it cannot attract buyers.
The funds guarantee the guaranteed price of their power, but the main innovation is The cost of taxation is directly passed to consumers, which is an indispensable mechanism for collecting bills today.
Of all of these, the biggest tax is renewable energy obligations.
This tax awards certificates for wind, solar and other renewable generators for each megawatt-hour (MWH) generation, in addition to the electricity they receive.
At the same time, power suppliers are obliged to purchase certificates to compensate for their carbon emissions.
The result is a renewable energy gold rush with wind farms across the UK.
The scheme has since closed new participants, but it continues to account for £6.8 billion due to the length of the awarded contract [$9.35B] Lottery on the bill. The cumulative expenses since 2002 have reached £67 billion [$92B].
In 2008, Ed Miliband also helped create a Feed Tax (FITS) during his previous tenure as Energy Secretary to enhance small-scale renewable energy sources such as solar and low-carbon power generation.
This pays the property owners, who put the solar panels on the roof, even if they themselves use the power supply, for every power they generate. …Sniper…
Analysts at Cornwall Insights say the policy costs increased by £198 in total [$272B] Average consumer bills per year.
These costs do not include the fastest growing subsidy of all, a contract for differentials (CFD), where low carbon generators can guarantee their power to fixed prices.
This means developers can safely build wind farms, solar farms or nuclear power plants to understand Even if the electricity market plummets, They will make a profit.
Last year, CFD subsidies increased by about £2.5 billion [$3.44B] For UK bills, you won't see information about charges as they are hidden in the wholesale price figures.
Read the full post in the Telegraph
