Thread by @NigelBanks_OEG

🧵Thread on the #PriceCap as today's projections got worse, yet again. Many households face energy bills this winter 4x last winter, with many still in debt from last winter. Yet @ilkehomes we are creating homes with ZERO energy bills in partnership with @OctopusEnergy 1/15

I've found two main sources for price cap projections who regularly update their forecasts - @CornwallInsight and #Auxilione (on LinkedIn). Both have updated this week to reflect OFGEM rule changes which increased bills further this winter: 2/15

The "price cap" isn't a cap, OFGEM limits unit rates (p/kWh) and standing charges on default tariffs. So if you use more energy, you will see a higher bill. This chart adds the #Auxilione projected rates with high usage (75% - green line) and low usage (25% - blue line). 3/15

It is important to note 25% of people typically use more energy than the green line. Some because they have big houses but some because they live in poorly insulated rented housing with inefficient heating or have unavoidably high energy use (e.g. for medical needs). 4/15

What is worse is that energy use is higher in winter than summer, those on prepay "pay as they use" and often have debt to repay too. For a high energy user, their January bill could be £705 (Vs £194 last yr) or £23/day (Vs £6/day last yr) 5/15

What is causing this? @CornwallInsight shows it is wholesale gas & electricity costs (blue bar). #Auxilione gives the granular build up by unit rate and standing charges (SC). SCs are up to recover cost of failed energy suppliers but unit rates have gone sky high 6/15

What is causing this? It is the price of natural gas which has gone from 30-40p/therm to latest Futures prices are 10x "normal" levels. They have continued to rise recently which is why the projections keep going up. 7/15

Gas power stations (cost of which is up hugely due to gas prices) set the electricity prices in the UK, as they provide the marginal electricity capacity [This needs changing]. As a result both future gas unit prices and future electricity unit prices are way up: 8/15

It is worth noting that in part a cold winter and China's use of more gas due to coal supply issues kicked off the gas spike pre-Ukraine, France's low nuclear output, low Hydro outputs and Russia supply are all now contributing to high gas prices. 9/15

OFGEM's price rule change last week made the January and April prices worse but the July & October are lower as a result. I understand this change was needed to keep remaining energy suppliers afloat. Gas producers are making huge profits but energy suppliers are not. 10/15

These are "flat" unit rates which most people are on. Energy suppliers actually have to balance their electricity buying every 30mins & the cost of this varies enormously every day (due to weather/energy mix). Smart/Agile tariffs track the market better (see @energystatsuk) 11/15

If you can move your energy use to low cost times (most people think night storage heaters), you can reduce costs massively, if you can export any excess generated energy at high cost times, you can increase revenues massively. 12/15

Heat pumps with hot water cylinders (which store heat made efficiently from electricity), well insulated homes (which store/keep heat in home) & batteries (which store electricity directly) can all help move energy to lower rates (@OctopusEnergy Go is 7.5p Vs 40p day rate). 13/15

Put these together with smarter controls working in background to manage your energy & you can create homes with zero energy bills even in today's energy market. That's what we are doing @ilkehome with @OctopusEnergy & @so_resi from @greshamhouseplc 14/15

All the above on summarised in one chart: 15/15