Why do the electricity companys charge more for business than homes.it all comes from the same supply doesn't it
That's a good question. The answer is two reasons the price cap as someone just pointed out, which is currently a lot less than the actual cost of supply.
The other is that it is very low risk to supply a house. You know pretty much how much energy they will use, which is tiny compared to an industrial user and the rates are not complex. They are made up of
1. The wholesale cost of supply.
2. Transmission costs, which are pretty much fixed for households, and very much not for business, but vary by postcode area. For example, in Cornwall I pay 12p per kW for using the network. London might be 8p. Scotland might be 25p. This is buried in your bill and you never see it.
The risk of supplying to business is like this.
You have to know what time they will use the energy. That's because the industrial supplies have time of use factors. Transmission and use costs vary and at peak times, these can be double the non peak.
If you are the supplier, you forward buy your energy if you have any sense, (the ones that didn't and bought on the spot market all went bankrupt).
To forward buy the energy, you need to know what time they will use it fairly accurately. They employ up to 80,000 points of reference to generate this demand curve.
If they get this wrong, and say the factory uses most of it's energy at 4pm in the afternoon not 10am in the morning, they have to buy, off the spot market, the shortfall in energy.
Since Brexit, prices on the spot markets have gone from £35 per MWh to peak at over £4000 a MWh, (that's £40 per unit kWh!!!!!).
You get that wrong too many times, the energy company is bankrupt.
To account for these risks, unless you have a solid supply curve, then you simply up the price to cover say 20% of the energy having to be supplied on the spot market, when you have to pay what ever price is asked, which they will now calculate at £40 a kWh, Pre brexit, this figure was just 20p.
We used to have cheap access to EU energy. It was offered to us, no strings attached, but Borris refused the offer!!!!!!!!!!
The turnip.
So given we import over 40% of our energy.... we used to pay a toll of £15 a MW to import energy over the inter connector to Europe. It is now £94 per MW. We used to be able to take advantage of the mid day settlement market in Berlin, which provided any excess energy, usually wind, at the lowest rates on the network, sometimes as low as £12 a MW. Outside the EU group, this is averaging £281 per MW.
What a result. It's also getting worse. Last Monday, the National Grid was within just 200MW of generating capacity from failing entirely, which, if it wasn't averted would have cause a cascade failure of the network that could have taken down our energy systems for months. This will eventually happen, at least a large local failure, probably Yorkshire or Midlands. When it does, there is something called the "Black Start" protocol. The costs of invoking that are literally catastrophic.
My advice is buy a generator and one of those isolating switch over panels, wire in your ring main with the fridge on it light circuits, combi boiler on a radial spur and buy a lot of diesel and pray we rejoin the common market or that we get a few Gigawatt class offshore wind farms built ASAP.
