Thread by @7Kiwi

Why are electricity bills going up? Gas has played a part, particularly in the short term, but if you zoom out and look at a longer timescale, renewables are the main driver of high prices and will continue to be so. A thread 🧵(1/n)

When you dig into the detail, electricity bills are up by £339, from £587 to £894 inc. VAT since April 2019. Of this, Renewables related costs are up £128 - of which network costs +£75, Capacity Market +£12 and subsidies +£40, comprising RO's +£25, CfDs +£11 & FiTs +£4 (2/n)

Direct fuel costs (ex-CfDs), which is mainly the increase in gas prices, are up slightly less at £113, reflecting the increase in wholesale prices going up from ~£62/MWh to £93/MWh. Gas prices up more steeply from £22/MWh to £41/MWh (3/n)

Other costs (Adjustment Allowance, Op Costs, Smart Meters and other ancillary costs) are up £49. Policy costs (ex RO's & FiTs) including Energy Company Obligation and Warm Home Discount, are up £21 (4/n)

Although the VAT rare has stayed the same the VAT take has gone up £16 and the larger margin allowance has pushed up the profit element by £12. (5/n)

So, where are bills going? Renewables Obligation subsidies are forecast to rise from £7.6bn in 2023/24 to £8.5bn in 2026/27. Feed-in-Tariffs will rise with inflation and new projects coming online will push up CfD costs too, especially if gas prices fall (6/n)

More intermittent renewables on the grid will push up grid balancing costs from the current £2.5bn and the OBR forecasts grid backup costs through the Capacity Market to go up from £1bn last FY to £4bn in 2027/28, again pushing bills up (7/n)

Then we have the Clean Power 2030 plan, costing £260-290bn according to NESO, that will likely add £26-29bn/yr to bills if completed, saving at most £7bn in gas used for electricity. (8/n)

Gas-fired electricity is also subject to a carbon tax through the Emissions Trading Scheme that currently adds about £14/MWh to wholesale prices and this is due to rise as the cost of carbon goes up from £42/tCO2 to £147/tCO2 (9/n)

If you want to know why your electricity bill is going up, look to renewables and the broader Net Zero policies for the answer. We need to stop this madness now (10/n).

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