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James Kirby's picture
Retired Senior Manager At Ontario Power Generation, Retired

Areas Of Expertise- Toxic contaminants, New Technology assessments, Computer Modeling, Interconnections - Reliability Assessments, Purchase and sales Forecasting, Reserve value of...

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  • Oct 8, 2021

Coal and gas prices arising pretty well everywhere as a result of shortages caused by a number of factors, among them investors realization that greenhouse gas emissions limits may limit the value of their investments and the recovery time to get their money back. Under these circumstances some oil and gas companies are diverting investment money into renewable energy sources while others are staying the course. The ones that elect to divert their investment money into other areas benefit from higher prices for their products to the takes around 4 years to recover the energy invested in manufacturing solar panels. A number of new technological developments offer the hope that this may drop to as low as one year. For wind power the energy invested in making the turbines is recovered within 3 to 4 months on the best sites. A poor site with a transmission line of 100 km set of 50 might increase this by 25% or so, but it cannot be claimed to be significant.

At the moment this energy must come from fossil fuels because there is nothing else.

So demand is increasing, without a consequent matching increase in supply, which sends prices up . A number of geopolitical factors, including restrained gas supplies from Russia are also contributing to increasing natural gas prices in Europe. The relative contribution of these 2 factors is anybody's guess, but there is a risk of a backlash against green energy, deserved or not.

Matt Chester's picture
Matt Chester on Oct 8, 2021

Thanks for sharing James-- I do think the mainstream public who isn't plugged into the energy trends are in for a rude awakening soon as they bills start to pile up this winter. What do you suggest utilities do to best prepare their customers? 

James Kirby's picture
James Kirby on Oct 8, 2021

Nat gas Prices are Surging

James Kirby's picture
James Kirby on Oct 8, 2021

The worst thing to do would be to hold the information back until it was too late for the consumer to do anything about it. Actually, there isn't much they can do except budget for the increase. At least they can start the budget adjustment process now. Full-page ads in the newspaper explaining why the prices are going up, all of the factors, and perhaps pamphlets inserted with the bill to get people suborning about what might befall them. I would also proactively talked to the government about programs to aid those who positively cannot afford these kinds of increases.

The prices shown above are spot market prices going into the winter. The article wasn't specific about where those spot market prices were, but I am presuming that they are  Henry hub prices. The consumer doesn't pay these and that Bill gets average stand with other charges as well so the percentage increase for the consumer won't be quite as bad. But I am sure that it will be very noticeable. Particularly in Europe where prices of servers up to 5 times their previous values.

People use natural gas for heating really won't have much of an alternative, beyond whatever people can do to weatherproof their house that they haven't already done. The utilities should take the lead in these programs if there is any leeway for them.

Perhaps someone can tell me whether the reluctance of investors to invest in developing or even maintaining fossil fuel sources a cause of this And to invest in coal. I would suspect that they are reluctant because we have told the industry that we are switching off those fuels. But if we still need those fuels pending the completion of the transition, and we do, who in their right mind would invest in them except for extraordinary returns. 

James Kirby's picture
Thank James for the Post!
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