Watt's the Cost? Navigating the Currents of Electricity Pricing

Electricity bills typically consist of two main components: a standing charge and a unit charge. The standing charge, a fixed daily fee, covers infrastructure maintenance, while the unit charge varies based on energy consumption measured in kilowatt-hours (kWh). This setup aims to distribute costs fairly and incentivise energy efficiency.

However, the regressive nature of the standing charge exacerbates living costs for lower-income households, posing a disproportionate burden. Recent decisions to raise standard charges clash with efforts to promote energy conservation, potentially hindering climate change mitigation and critical exasperating the cost of living crisis.

Yet, could these decisions signal a future where decreased unit charges and increased standing charges become the norm, reshaping energy pricing dynamics?

For renewable energy to be reliable, it must be abundantly available or supported by robust storage. While abundant renewables offer cheap and consistent electricity, storage models stabilize prices but may not generate significant savings. However, both models risk dropping unit costs below sustainability thresholds.

In superabundant scenarios, access costs may become negligible, possibly covered by universal services or a UBI payment structure. Conversely, less abundant scenarios pose access denial risks, especially for vulnerable groups. Ensuring equitable access to renewables is crucial, requiring innovative policies for affordable and reliable energy, particularly with the electrification of transport, cooking, and heating on the horizon.

TPEX offers future imagining and tenth person consultancy for decision makers looking to consider the future, before opportunities are missed. We offer online and in-person consultancy to help your business make informed decisions about the future.

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