Households face being charged higher energy bills in calm weather when wind turbines are not operating at full capacity under plans drawn up by the Government.
Consumers who use electricity when the wind is blowing hard could pay less than at other times as part of proposals to more effectively balance the grid, the Business Department said as it launched a major review of energy markets.
Ministers are also considering a move to charge bill payers less if they live close to a wind or solar farm.
It came as the National Grid separately warned that a target to replace domestic gas boilers with heat pumps is in danger of being missed without hundreds of millions of pounds more support from taxpayers.
Martin Young, energy analyst at Investec, said encouraging consumers to change their behaviour will bring down costs overall and would therefore benefit all households.
But he added: “You get your wind generation when the wind blows. You can’t control when the wind blows.
“By changing people’s behaviour and getting them to move their consumption around with the carrot of price then that is absolutely something that needs to be done.
“You will always find someone who will lose out from a change. It’s the right thing to lower the overall system costs, and if you find groups of people, particularly vulnerable people who would be losing out, then you need to think about policy tweaks to make sure those people are not disadvantaged.”
The Government has said consumers who are unable to change their demand would benefit from the more flexible system as it would reduce price spikes and make electricity more affordable generally.
Policy work is now under way to determine the exact reforms that will be put in place. The Government expects to narrow down proposals by the end of 2023.
Kwasi Kwarteng, the Business Secretary, said: “We’ve just seen the price of offshore UK wind power fall to an all-time low and gas is a shrinking portion of our electricity generating mix, so we need to explore ways of ensuring the electricity market is adapting to the times.
“That includes ensuring the cost benefits of our increasing supply of cheaper energy trickle down to consumers, but also that our system is fit for the future.”
The Government’s so-called Review of Electricity Market Arrangements will also cut household bills by decoupling electricity prices from the wholesale gas market, where prices have surged since Vladimir Putin invaded Ukraine.
The price of wind power fell to a record low earlier this year, and the market reforms are aimed at ensuring consumers benefit from these price reductions. Energy market prices are currently based on the most expensive form of generation, and therefore track spiralling gas prices.
Consumers could also benefit from lower bills depending on where they live. The Government is looking at whether to charge consumers less if they live near a wind farm or other power generator, to take into account the lower costs of maintaining power lines to their homes. The change would chiefly benefit Scotland and the North of England, where most wind farms are located.
The Government’s plans came amid fresh upheaval in European energy markets, with the International Energy Agency (IEA) urging consumers on the Continent to turn down the air conditioning by one degree celsius to conserve power.
It added that government and public buildings should take the lead on cutting down energy use, and urged countries to coordinate their plans for rationing power across the European Union.
Fatih Birol, executive director of the IEA, said: “If Russia decides to completely cut off gas supplies before Europe can get its storage levels up to 90pc, the situation will be even more grave and challenging. It will require cool-headed leadership, careful coordination and a strong degree of solidarity.
“European leaders need to be preparing for this possibility now to avoid the potential damage that would result from a disjointed and destabilising response.”
Meanwhile, the National Grid has warned plans to install millions of heat pumps to replace gas boilers are “insufficient” and risk missing the Government’s net zero targets.

 

https://www.telegraph.co.uk/business/2022/07/18/electricity-become-cheaper-windy-sunny-days/


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