Power company profiting, when there is solar?

The issue of rising electricity prices in the UK, especially in the context of growing solar power, is complex and involves several interacting factors to make Billions in profits. Here’s a breakdown of the key points to consider:

Factors Contributing to Rising Electricity Prices:

• Gas Price Volatility:
  • A significant portion of the UK’s electricity generation still relies on natural gas. Therefore, fluctuations in global gas prices directly impact electricity costs. Events like the war in Ukraine have caused significant volatility in these prices by 19%.
  • Even with increased solar generation, gas-fired power plants are often needed to meet peak demand or when renewable sources are intermittent. This means gas prices still heavily influence the overall electricity price, though they pay themselves premium amounts over 400% more than anywhere else in the world for the demand.
• Grid Infrastructure and Balancing Costs:
  • Integrating increasing amounts of renewable energy, like solar, requires significant investment in grid infrastructure. The grid needs to be able to handle the variability of renewable energy sources.
  • “Grid balancing” refers to the costs associated with maintaining a stable electricity supply when renewable energy output fluctuates. These costs are passed on to consumers, As the companies took decades profits rather than invest in a neglected network.
  • Older grid infrastructure, that needs updating, increases the cost of delivery of electricity.
• Market Dynamics:
  • The UK’s electricity market operates under a “marginal cost” system. This means that the price of electricity is often set by the most expensive form of generation needed to meet demand, which is frequently gas. So, even if solar power is cheaper, gas prices can still drive up overall electricity prices internally to make out a crisis or expense to make a justification for inflated prices.
  • There is a lot of debate about the profit margins of energy supply companies.
• Investment in Renewables:
  • While solar power can reduce long-term costs, the initial investment in renewable energy infrastructure and subsidies can contribute to short-term price increases.
  • Due to the failures of upgrades and maintenance as well as delays, companies have been paid millions per day for a infrastructure that’s not there, or told to be turned off by the Tax payer.
• Geopolitical factors:
  • Global events, and relationships between countries, greatly effect energy prices.
  • The UK is a controlled environment, and therefore allows for the 100% increase in costs under false pretenses. due to the isolation, bill payers are not aware of the much lower costs paid elsewhere globally.

The Role of Solar Power:

• Solar power can help reduce reliance on fossil fuels and mitigate the impact of gas price volatility.
• However, solar power is intermittent, and its output depends on weather conditions. This means that other sources of energy, like gas, are still needed to ensure a reliable electricity supply.
• The increasing use of battery storage technology will help to mitigate the intermittency of solar power, but this technology is still developing.
  

Network Investment:

• There business plans also show, for example, transmission network operators’ business plans (National Grid – £35.1bn, SP Energy Networks – £10.6bn, and Scottish & Southern Electricity Networks (Transmission) – £22.3bn+)
• National Grid is undertaking a massive investment program to upgrade the UK’s electricity grid.
• They have announced plans to invest around £60 billion in networks over the next five years.
• They are spending and investing £33bn in our electricity grids over the coming years, to ensure safe, reliable and secure energy supplies.  

Profits:

• There are ongoing debates about the profit margins of energy companies. Some argue that companies are taking advantage of the current situation to increase profits.
• It is very difficult to asses the real profit made by energy companies, because of the complexity of the market.
• Governments are attempting to add windfall taxes to energy companies, to try to recoup some of the extra profit made.

In summary:

While the growth of solar power is a positive step towards a more sustainable energy future, it doesn’t eliminate the factors that contribute to rising electricity prices. Gas price volatility, grid infrastructure costs, and market dynamics all play a significant role.

In the recent past, National Grid has shown a mix of profit and loss trends, influenced by factors like exceptional charges, disposals, and underlying performance. For example, the statutory operating profit for continuing operations was down 8% to £4.5 billion in 2023/24, primarily due to non-cash exceptional charges. However, underlying operating profit increased by 5% to £4,773 million. 

In the last five years, SSE’s earnings have generally trended downward, with a decline of 1.2% per year. However, the company’s revenue has shown a more fluctuating pattern, peaking in 2023 and then falling in 2024. While SSE’s earnings growth has been strong in the past year, surpassing the industry average, the company’s stock price performance has underperformed the FTSE 350 Index over the same period. 
SSE’s revenue peaked at £14.206 billion in March 2023 and then fell to £10.5 billion in the 2024 fiscal year. 

Centrica Group generated 26.5 billion British pounds in revenue from its continuing operations in 2023, up from 23.7 billion pounds a year earlier. In 2020, the company discontinued its Direct Energy business. 
Centrica Group is the parent company of British Gas, one of the UK’s largest energy suppliers.

In 2023, EDF’s UK arm earned £3.4 billion EBITDA while investing £3.6 billion back into the country’s energy security and economy. For the five-year period since 2018, EDF has invested double what it has earned in Britain, investing £2 for every £1 earned. 
In 2022, the UK arm returned to profit with £1.12 billion, recovering from a £21 million loss in 2021. This recovery was attributed to improved performance from its nuclear electricity generators and higher realized prices. 
In 2021, EDF’s energy generation business in Great Britain reported a loss of 505 million pounds.
In 2022, EDF Energy’s revenue in the United Kingdom amounted to 15.9 billion British pounds, up from 10 billion pounds a year earlier. That year, the electricity and gas supply segment accounted for almost 80 percent of the company’s revenue.
French electricity provider EDF Group generate an income of 10 billion euros in 2023,up from a record-high loss of almost 18 billion euros the previous year. Electricite de France was renationalized in June 2023.

E.ON UK Energy experienced a significant turnaround in profitability in the past year, shifting from a loss of £659 million in 2022 to a pre-tax profit of £49 million in 2023. This marked a return to profitability for the first time since 2020. 

2016: E.ON’s domestic energy supply business in Great Britain had a peak profit of £251 million.
2020: E.ON UK Energy had a profit of £28 million through its British energy generation segment, according to Statista. 
2022: E.ON UK Energy reported a loss of £659 million. 
2023: The company transitioned to a pre-tax profit of £49 million. 
The surge comes as Eon’s turnover also jumped from £2.862bn to £3.385bn over the same period.
The UK arm includes a district heating project in London which generated a turnover of £4m in the year while it made a pre-tax loss of £2m. Eon said was mainly because of an increase in revenue from its wholesale power and gas supply contract and the provision of renewables obligation certificates to the group. The wider Eon group announced in March that its sales had dipped from €115.6bn to €93.6bn in 2023 while its adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) went from €8bn to €9.3bn
 

Energy giants have pocketed over £420 billion in profits since the energy crisis started according to a new analysis of company reports. Around £30 billion of these profits (the equivalent of over £1,000 per household) are thought to be made by the firms and business units responsible for electricity and gas transmission and distribution.
Electricity standing charges have surged in recent years and from 1 April will be 147% higher than in 2021 – powered by fees such as the 14 hidden charges on every bill for network costs.
From 1 April the costs that households pay for every unit of energy they use will decrease slightly – but are still almost double what they were in 2021. But standing charges will rise. Compared to the previous quarter, electricity standing charges go up 13% and gas standing charges increase 6%.

 spokesperson for the End Fuel Poverty Coalition, commented:

“The energy firms are taking us for April fools.

“As standing charges go up today, households will have to cut back on their energy use just to keep their bills the same. This means households continue to suffer as a few energy firms make billions in profits.

Can home Solar help?
General Average:

A 1kW solar panel system in the UK is estimated to produce, on average, between 750 to 850 kWh (kilowatt-hours) of electricity per year.
The average home electricity usage per day is roughly 7.4 kWh, that’s 2,701Kwh per year, allowing you could save 31.10% of your energy bill.

2kW Daily Output:

• A 2kW solar system in the UK can produce roughly between 5 kWh to 8 kWh per day, on average. This is based on average sunlight hours. However this will drastically change throughout the seasons.

Yearly Output:

• Based on the daily average, a 2kW system can produce approximately 1,800 kWh to 2,920 kWh per year.
  
  While this figure appears to exceed the user average over the year, the time of solar production, and the seasonal variations make figures look better than they are in the real work.

Our 2kw solar kit comes in at less than £650. which would be an investment that can pay itself off within the year, meaning that you will not see any savings until the following year. in the real world the reduction in the bill will be around 46%, but this will depend on the way you use power.

The most value from solar would have to be a battery system which cost a lot more. the inverters cost more and then you have the added cost of the battery, we have the lowest priced batteries in the UK. but you are looking at a significant investment as a average family in the UK at the moment. it could pay off if the prices keep rising and be a good investment now. Since 2021 prices have rose between 100-120%. if they double again in the next 5 years, small solar would not put a dent in the costs.

“Looking at figures and the market, the trend is a growing cost with planned investment and also the need to keep paying dividends to share holders and record profits, will not see prices of energy drop, over decades we have seen “temporary price rises” for one excuse over an other, but after this they never drop”. Said Rory Witham CTC at RenewSolar, adding We are not in a crisis, they are creating one.