Skip to main content

The UK’s Energy Price Cap – friend or foe

Image: AP

Amidst the events surrounding the loss of Her Majesty, it is easy to forget that Liz Truss made her first move as Prime Minister last week by implementing an energy pricing cap for UK consumers. An average UK household will pay no more than £2,500 a year and a £400 rebate will be issued in six, monthly instalments. What will this do to solve the underlying problem?

Many UK households were facing severe energy poverty, so an emergency measure is understandable and welcome. But while it mitigates the immediate problem of the end consumer facing impossibly high energy bills this winter it does not address the root causes of the problem. A price cap does not allow the market to respond efficiently either through increased supply (the cap is driven by wholesale prices and supplier losses will be reimbursed) or reduced demand. The merit order, a market clearing price mechanism, has become the villain in this scenario. While the price levels are self-evidently unwelcome for consumers, the price signal is doing its job – accurately reflecting the current supply and demand fundamentals in the UK market. Simply put the country, and indeed Europe, is short power.

Prices are high because of a mismatch between supply and demand which needs to be addressed over an investment horizon. Without a long-term view, the risk remains of ongoing shortages combined with an escalating cost to the nation’s finances in future years because of the high cost of retaining a price cap. Taking it away is likely to be much more challenging politically than its introduction.

The aggressive push to renewables, supporting electrification, as the key means of achieving the legally prescribed 2050 net zero target, has resulted in a market where investment in weather dependent generation has surged compared to carbon-free baseload nuclear and reliably dispatchable fossil fuel generation. Government figures show that renewable generation capacity increased by 6.5 per cent in Q1 2022 on the same period last year. While overall capacity has been nominally increased, reliability has been reduced.

The UK has a problem of both the market price level and the underlying market volatility. Both effects are based on this surge in wind and solar investment at the expense of taking a broader systems view. UK market design aimed to produce a marginal price signal which would signal tightness of supply and underpin investment. The effect of renewables is that this tightness is signalled on an extremely volatile and concentrated basis. The supply response has been nullified both by government and central bank policy and the negative effect of ESG considerations on fossil fuel investments. High prices are not visibly curing the underlying reasons for high prices.

To ameliorate the immediate negative political effects of these policy decisions, the UK government is taking on vast amounts of debt over the next two winters, with some analysts estimating a total cost of up to £150bn. This spending will reduce the pain on consumers but will have minimal effect on the wholesale price of power. The demand response will be, if not negated, then at least reduced. To put this current spending into perspective, Sizewell C., the newly approved 3.2GW Nuclear power plant, is estimated to cost £30bn which will account for 10% of UK power demand.

The UK’s problem is both a security and reliability of supply problem. Transmission constraints are being increasingly felt and balancing costs are rising year on year. Despite this situation the government is forecasting an increase in electricity demand by 2030 of 50%. Reducing unnecessary demand would help, but it is the supply response which is truly broken. It can only be fixed by

thinking of UK power as an interconnected and interdependent system and nurturing it as a system rather than emphasising one part (zero carbon during generation) to the exclusion of the others. A weather dependent power generation stack is extremely complex, and that complexity can no longer be reliably simplified into one useful price signal as it was once understood.

The solution is easy to state but incredibly challenging politically to implement: solve for the long-term beyond the life of a parliament by creating a stable investment environment; balance diverse sources of renewables and fossil-fuels to create a robust generation mix; invest in reducing transmission constraints; find practical means of reducing the burden of high-power prices to those most affected. Any temporary price cap may or may not be temporary, but it will certainly not fix the underlying problems.

Cobblestone Reconnect 2022: Thailand Trip

Last week, several members of our #DreamTeam were a part of Cobblestone Reconnect in Phuket, Thailand because we like to celebrate our people and their accomplishments in BIG ways.

While on island, we enjoyed being a part of Amazing race, Cobblestone Olympics, Painting a children’s school, DISC workshop and some night life of Thailand 🤫.

Our team had a great time exploring the Thai culture – from making the famous Thai papaya salad – Som Tum to traditional Thai dancing – Khon. We were treated to an experience of a lifetime.

Checkout some of the pics from our team’s trip to Phuket below!

Electricity Trading at Cobblestone Energy


Electricity is a commodity some of us take for granted. It is the form of energy that powers our homes, factories, and increasingly, our vehicles. Being able to request supply at a flick of a switch seems so simple. At any time of the day, you can switch on your kettle and have your tea ready in a few minutes, yet the operations for providing such a service are far from simple. Unlike most energy commodities such as oil or gas, electricity cannot be stored on a large scale*, meaning all supply must be consumed in real time. Any shortfall or excess of it can damage electrical equipment, or cause blackouts. 

Every transmission grid has a transmission system operator whose job is keeping supply and demand in constant equilibrium, minute by minute, second by second. This is no easy task, and in Great Britain’s transmission network, it is taken on by National Grid Electricity System Operator (NGESO). Through the ‘Balancing Mechanism,’ the National Grid can call on generators to increase or decrease supply at the prompt, based on demand levels to help balance the amount of electricity on the grid in real time.


*Electricity can be converted to other forms of energy that are easier to store in scale, like chemical potential energy in batteries, or gravitational potential energy in pumped storage hydropower plants. However, these assets still need to be dispatched manually. Pictured above is the Cruachan pumped storage plant, located in the Cruachan ‘The Hollow Mountain’. [image credit: Drax Group]


At Cobblestone, our aim is to predict the future imbalance of the grid and make calculated, risk-adjusted trades based on our own in-house analysis. 

So, how do we do it actually? 

We trade on the GB Intraday market, which is a real time generation platform catering for the small imbalances the grid has at the prompt. This market consists of power producers i.e power plants, large scale consumers such as factories and local power distributors as well as nonphysical traders such as Cobblestone. By nonphysical traders we mean that we neither own a power plant (where we can generate electricity) nor do we have any consumer to supply electricity to. We are just in the middle. Buying it from an anonymous party who could be a generator of electricity, a power plant, or a nonphysical trader like us and then selling that power to an anonymous party who could be a supplier of electricity or again, a nonphysical trader like us.  

The power prices on this market are driven by demand and supply fundamentals on any given day i.e if there is more demand than supply, the price goes up, if there is more supply, the price goes down. We conduct our own analysis into diverse types of generation whether it be gas, wind, solar or the many other types that the GB market uses to keep the country’s lights on. We dig deep into demand, trying to predict future demand patterns or fluctuations caused by any change in fundamentals. Our value comes in developing a strong understanding of market fundamentals at any given time to have a view on where we think prices should be. If our view differs from what the price currently is, then we act on it. 

The GB intraday market is where we started our core business and have been the experts in. But we didn’t stop there. At Cobblestone, we also do Cross Border Trading. Europe’s electricity network is connected by what is known as interconnectors. These are huge cable structures designed to flow power to and from different countries to help with the supply and demand constraints with direction often dictated by the price differentials between the connected countries. Mainland Europe benefit from the distribution of German power, who generate a lot of their power through solar generation and can flood their neighbors with cheaper energy. GB instead experiences more volatile prices as interconnector constraints are fewer. Currently, GB has connections between Ireland, France, Belgium, Netherlands, and Norway. However, projects are on-going to continue to increase the connectivity of GB with plans to connect both Germany and Denmark.   

Now, how does this Cross Border Trading work? 

What we do is that we buy power in UK and move it to France or vice versa depending on our view of the fundamentals in these countries. This involves analysts and traders working together to predict price differences between any 2 interconnected countries and thus flow power to, or from different countries across the interconnectors. This enables us to benefit from price spreads often seen across different countries experiencing different fundamentals throughout Europe.  For example, on a non-windy day in UK, when gas prices are so high, the power price in UK whose generation consists of 60% gas plants would be higher than France whose power generation is mostly dominated by nuclear. Due to this price differential, we would be willing to buy power in France and flow it across the interconnector to GB.  


Did we stop there? Definitely NO. 

Furthermore, we also trade on the UK ‘Day-Ahead’ market, with scope to expand further down the GB curve into longer term positions. In the day-ahead market, our team of analysts participate in auctions to buy or sell power for a given time the following day based on both systematic and discretionary strategies.  

All this combined gives Cobblestone a diversified portfolio when it comes to the power market. We endeavour to expand our operations, as mentioned earlier, by extending our scope down the GB curve as well as, reaching out to GB’s neighboring countries to fully understand their fundamentals.  

FEEDBACK CULTURE: A Cliche or Absolute Necessity


When it comes to corporate processes, a lot of procedures have been ingrained into organizational culture that many employees, and employers alike do not stop to think about their purpose.  The concept has always been a fascinating topic of conversation, and a significantly heavy one for employees. According to many successful business leaders worldwide, feedback is one of the most important ingredients for growth and innovation. And we at Cobblestone Energy do not disagree. Feedback is the hallmark of our culture of lifelong learning and continuous reflection.  

There are varying benefits to a culture of feedback. From a developmental perspective, feedback enables individuals and teams to learn from their mistakes and proceed effectively. Of course, this requires that feedback is given in a constructive manner. Feedback therefore acts as a channel for holistic development, highlighting areas of improvements with possible solutions. Real time feedback enables teams to meet objectives through mitigating obstacles as they arise

This means that failure is anticipated, and support is offered when required. In many cases, feedback enables managers to make decisions about promotions and turn over in combination with other systems. Finally, feedback creates room for an open and healthy working relationship within an organization. Openly sharing feedback helps team members to earn each other’s trust, learn how to work together, and manage their expectations. This is usually in the after math of continuous practice.  

Over the years, we have implemented and refined our feedback processes to ensure that they are highly effective and purposeful. This has involved a lot of investment in the form of time and training to make our staff comfortable and knowledgeable in the processes. According to Matter app, Elon Musk, CEO of Tesla and SpaceX says, “Pay attention to negative feedback, and solicit it, particularly from friends.” This is part of how he turns failure into awesome. How then, do we turn feedback from being a no-go zone or to-do list task for employees to a strength that can have a positive impact on not only organizations’ success but also careers and individual development. 

It is important that managers and team members bridge the communication gap when it comes to the purpose of the feedback processes in place. Managers need to articulate both the benefits and reasons for the feedback processes. A lot of time, employees tend to think that feedback processes are focused on collecting negative information about staff members in order to dismiss their employment. Unfortunately, this reputation is not by fault. A lot of misconstrued biases have developed from managers misusing information from feedback processes in many organizations. This has created a massive barrier for honesty and enthusiasm when it comes to giving feedback.  

Additionally, feedback processes should be straight-forward. Teams should receive appropriate training when it comes to giving feedback effectively as well as receiving it. The former is usually prioritized ignoring the fact that within teams, it cannot function well without the latter. It is important to also set up systems that incentivize members to solicit and give feedback. Some options to explore would be holding timely dedicated feedback sessions and incorporating feedback within day-to-day work. This is in fact a good strategy for encouraging a feedback culture. It reduces the pressure from scheduled feedback sessions and events and makes members comfortable with proactively airing their opinions.  

We have seen how feedback is valuable in any form of organisation. Most importantly, individuals can use feedback as a tool for their own development by seeking it and using it effectively to leverage their strengths and improve on areas of potential. Within our culture, feedback is a widely accepted form of development and our leadership continues to set an example by always seeking it and acting upon any areas that require change. As an employee, I feel very much inspired by this humility and always confident in the fact that speaking out may impact the business and cause positive changes within the company. This has a direct benefit on my value addition. Additionally, I have learnt to keep my head up even in the face of criticism, and be aware that negative feedback is not an attack on who I am, but a fertilizer for the excellence within my potential.

Business Leaders’ Advice to Graduates: Growth Amidst Pandemic

As a lot of folk wisdom suggests, resilience during adversity and a willingness to change and adapt are key components in the success of any individual or organization. At the start of the pandemic and during its progression, we have not been entirely short of challenges. Not to say, the setup of our Dubai office in 2020 also involved a lot of learning on our part. We have had to maximize our efforts in putting our people first; their safety and engagement and offering the best support to enable our entire team to continue thriving amidst the uncertainty.  

Fortunately, we have been able to diligently continue our trading activities. The global electricity markets operate 24-7 and we as Cobblestone Energy, one of the largest participants in the UK’s Intraday electricity markets means continuity is valuable to the balancing of power and its delivery to users across the continent. We have also successfully expanded our team, adding 11 new members. Our growth is still ongoing, as we continue to hire remarkable individuals from across the globe and spread our operations.  

Our team has shown an intense ability to adapt during the period. Innovation and agility have been the essence of our teamwork. We have seen the greatest developments in systems and efficiency over the last few months indicating an ardent desire for sustainable growth on everyone’s part. We have also expanded on existing and modern technologies that have changed how we work for the better. The team is the firm and continues to be the greatest reason for its success.  

We also have highly effective leadership that has empowered us to transform great ideas into reality and manage agile processes with the right information and guidance. Our leaders have also worked tirelessly to ensure the team has all the necessary tools and is highly motivated and aware of the vision and our purpose. The combination of our remarkable team, leadership, expertise in the field, and an extraordinarily rich and exciting industry in which we operate has set us up for a truly enriching career. That and more is the reason we are the best at what we do and are key players in the electricity markets.  

As part of our strong focus on individual development, our leaders, learning from their experience extend insightful advice to graduates on starting a career in the post pandemic era. Our team has vast experience in interviewing thousands of candidates and developing talent across different departments with rich expertise in commodity markets and technology. The gems in this knowledge apply across different fields and are relevant to anyone in any position or stage in their career.  


The pandemic has substantially impacted our working environment, business activities & consequently the job market. Only those who are very well prepared and flexible enough to adapt to the post-covid era will be able to secure jobs & thrive in their careers.

Graduates need to build transversal soft skills that are transferrable across multiple sectors & domains. This applies to Communication skills, Leadership skills, Analytical skills, Problem solving skills, …etc. These will continue to be key skills required by hiring managers especially in a remote work environment. Thus, graduates should develop & strengthen these skills through relevant short-term programs, online trainings, books …etc.

In addition, graduates should adapt well to work remotely while being super productive & efficient, as hybrid and remote work environments will be increasingly the norm. 

Given the current environment, one should expect that the “business as usual” approach to hiring and recruitment is not going to hold anymore. The first thing to do here would be to temper your expectations, understandably for most businesses the recruitment and onboarding process is going to be much slower and may be fully virtual.  

As it is often said, it is during crisis that one can also encounter opportunity. Make sure that you are always seeking to improve continuously, this can be through developing a skill, or taking a deep-dive into your domain of interest. Such things can lead to outsized compounded marginal gains (remember that (1.001)365 = 1.44, meaning such small improvements daily can lead to a 44% increase over the year. Of course, it is not entirely possible to quantify your growth and development, the idea here being that people recognize the importance of constant growth and development.  

When applying for jobs, I always feel that it is better to go deep, rather than broad. What I mean by this is that rather than applying for many jobs in different domains, find a particular domain (or required skillset) that particularly interests you, and then fine tune your application to the specific role. Some of the most enjoyable (and exciting) candidates that I have interviewed for the trading team have been the ones that show a deep interest in the domain and will go above and beyond to develop their understanding.  

Finally, when joining a company, make sure that you understand what is expected of you, seek regular feedback and at the same time constantly introspect and think about where you are, where you are going (where you want to be?) and how you are going to get there. 


Graduates will enter a very different world due to the pandemic and need to be prepared for it. They will be faced with a corporate environment where the jobs will be limited as companies will be very cautious of hiring. 

In such a scenario they will need to display grit, resilience, and perseverance. One of the things they can do is to understand the roles and see if they can equip themselves with the qualifications required for those. 

We are already seeing an increase in gig workers, part-time employees and remote employees which helps people take up multiple roles and develop their experience. This is something they should be ready to embrace and prove themselves to be good at. 

Once in a role, they should expect to learn their role on their own with at times, limited personal interaction from colleagues, not an easy thing to do when you are used to studying in college with other students and requires focus and discipline. 

In such an atmosphere what can help them is to have a clear understanding of what is expected from them from Day 1 (clear goals and Key Performance Indicators (KPIs), schedule regular catch-up time with their manager to see how they are doing and have regular performance check-ins to course-correct if required.