Green energy subsidies that will cost every household £110 a year by 2020 are poor value for money and £17 more expensive than planned after the Government bust its budget, according to a damning National Audit Office report. Ministers agreed in 2011 that the subsidies for projects such as wind and solar farms, which are funded by levies on consumer energy bills, should not exceed £7.6bn by 2020-21. However, they admitted last summer that they were on track to overshoot that and spend £9.1bn. An NAO report finds a series of failings in the way ministers handled the budget and says they didn’t spot the overspend until far too late because they were using out of date assumptions. A Treasury board that was supposed to oversee the spending did not meet for almost two years until last summer and ministers failed to learn the lessons of previous overspending. As well as busting the budget, the subsidies that have been allocated did not secure “best value for money” and may have been £300m a year too generous.
Telegraph 17th Oct 2016 read more »
Times 18th Oct 2016 read more »
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Letter Dr Robert Gross: Jonathan Ford’s comparison point is wrong and he has the price of low carbon power wrong (“UK’s climate policy must be based on an evolutionary strategy”, Inside Business, October 10). The wholesale price of UK power is indeed about half the price being offered to Hinkley Point. But the wholesale price is too low to build any form of new power station – gas, nuclear, coal or renewable. The UK is running on its legacy of existing power stations at the moment, which keeps prices down. Our growing fleet of wind and solar farms also pushes down wholesale prices, while receiving a top-up payment for renewable energy. New gas power stations can get a capacity payment for reliability – also on top of wholesale price. Wholesale prices thus reflect short-run marginal costs, not the full costs of a new power station. The comparison for new low-carbon power is not a wholesale price that is too low to build anything, but most likely a new gas power station. The wholesale price might be £45 per unit of power, a new gas station is likely to be about £60-£70 per MWh and Hinkley will get £93.50. These are our comparison points. Even so, Mr Ford is right that the Hinkley deal looks expensive. Low carbon can be much, much cheaper. Wind farms can win contracts at $60-$80/MWh, according to the International Energy Agency. Solar recently won a contract at just $35 in Mexico. The UK is obviously less sunny than Mexico but no less windy than anywhere else. Costs are coming down because renewable energy technology is improving, but it is important to ensure the lowest price. One way is to use auctions, and avoid the complex negotiations that have beset the Hinkley deal. The offshore wind costs Mr Ford cites are for plants built before the UK introduced a system of auctions that dramatically reduced prices for both onshore and offshore wind. The climate debate is complex. Wholesale power prices or the imputed carbon price of a particular (and expensive) project tell us very little about long-term costs of decarbonisation. Its therefore essential to get the full facts, both for new low-carbon energy sources and for the fossil fuels we compare them with.
FT 17th Oct 2016 read more »
Independent supplier Ecotricity is increasing its energy prices by an average of 5.7 per cent for dual-fuel customers. Electricity prices will rise by 7.8 per cent whilst gas prices increase by 3.8 per cent for customers with the green supplier from 14 November. The average increase of 5.7 per cent adds around £1 per week to customer’s bills, according to Ecotricity. The company blamed the rise on cost increases from the grid operators and policy from government.
Utility Week 17th Oct 2016 read more »