UK Gas and Electricity Prices in International Context
On the 30th of June, the Department of Energy and Climate Change approved the 5th Carbon Budget and also released a large number of updates to its statistical data sets, including information on gas and electricity prices in the UK and other countries, data that underlines how unwise is the unilateral approach to climate change as embodied by the 5th Carbon Budget.DECC reports that in 2015 UK domestic electricity prices including taxes were:
Seventh highest in the International Energy Agency member countries (of which there are 29), and 21% above the IEA country median.
In other words, UK domestic electricity prices are comparatively very expensive.The figures for industrial electricity prices are also unfavourable. In 2015, average UK industrial electricity prices including taxes were:
Fourth highest in the IEA, and 43% above the IEA country median.
In other words, UK industrial electricity prices are comparatively expensive.The situation with regard to gas prices is fortunately better. In 2015, average UK industrial gas prices, including taxes where not refunded, were:
Eighth lowest in the IEA, and 9% below the IEA country median.
Domestic gas prices including taxes where not refunded, were:
Thirteenth lowest in the IEA, and 1% lower than the IEA country median.
The general asymmetry between gas and electricity is easily explained. The UK’s climate policies, particularly subsidies to renewables such as wind and solar power and biomass bear very heavily on electricity, and less so on gas.The tables also provide very helpful country price tables that allow quick comparisons. These can be remarkably illuminating. For example, in 2015 domestic electricity prices in the UK were about 15.5p/kWh, whereas in the United States the price was 8.3p/kWh, and in Korea a remarkable 6.7p/kWh.The highest domestic electricity prices are found in Germany (22p/kWh and Denmark (21p/kWh, both countries with very aggressive renewables policies and extensive deployment, as well as policies that share the burden of renewables unevenly between industrial and domestic consumers. German industrial prices are about 9.5p/kWh, which though high by European standards (only Italy is higher in the EU 15), is only a fraction over that in the UK (9.36p/kWh). To put this another way, domestic electricity prices in the UK are 6p/kWh more than industrial prices; but in Germany the difference is 12p/kWh. Doubtless this helps to protect jobs in export based industries, but one wonders how much further the German household's Willingness To Pay can be stretched.