Electricity bills set to rise to pay for wind farm subsidies
Household electricity bills will rise by as much as a quarter to pay for wind farms and other forms of renewable energy, according to a new report.
The study challenges the Government’s claims that energy bills will actually fall in the next eight years because of energy efficiency savings.
The Coalition is relying on the savings to offset the price increases caused by renewable energy subsidies. Those extra costs are added on to household bills in the form of consumer subsidies.
This week the Department of Energy and Climate Change (DECC) will publish its draft energy bill, setting out how it plans to reform the electricity
market and reduce the cost to households.
These include the Green Deal, which will provide loans to fund loft and wall insulation; the roll-out of 'smart’ meters to help control and monitor energy consumption; and the improvement in the energy efficiency of kettles and other appliances.
But a study of the Government’s own figures by the Renewable Energy Forum (REF), a specialist renewable energy consultancy, has accused DECC of deliberately misleading the public.
REF claims its analysis of the Government’s own figures shows that two-thirds of households, about 17 million in all, will be worse off - even if energy efficiency targets are met in full.
In a 54-page report published tomorrow [Monday], REF will conclude: “DECC has made unrealistic assumptions about the use of energy efficiency measures to offset the costs to households, but even on those optimistic assumptions 65 per cent of households will still be net losers.
“In fact there is every reason to suppose that the efficiency measures will not live up to these expectations and that costs have been understated.”
REF estimates that the UK’s climate change policies - which promote wind farms and other forms of renewable energy - will be responsible for 'major increases’ in the retail price of electricity and gas.
It estimates that electricity prices on domestic bills will rise by 27 per cent by 2020 and by 34 per cent on bills for medium-sized companies. Gas prices will rise by seven per cent and 11 per cent respectively.
The row over the cost of renewable energy - especially wind farms - has caused tensions in the Coalition with DECC run by first Chris Huhne and then Ed Davey, both of them Liberal Democrats.
Earlier this year, 101 backbench Tory MPs wrote to David Cameron demanding that the £400 million a year subsidies paid to the onshore wind turbine industry be “dramatically cut”. In all, REF estimates that £1.5 billion a year is paid out in subsidies for all forms of renewable energy - including on and offshore wind - and that figure will rise to £8 billion a year by 2020.
A DECC spokesman said obtaining a “diverse energy portfolio is crucial for our energy security and to shield our homes and businesses from the sort of price shocks that we’ve seen filter through into our energy bills as a result of rocketing global gas prices”.
The spokesman added: “We are going to revolutionise the energy efficiency of millions of homes and businesses across the nation through the Green Deal which will launch later this year.”
DECC has insisted that energy bills will begin to fall from next year and will be reduced by seven per cent - or £94 - by 2020 because of new energy efficiency policies.
How can anyone predict energy prices in 2020?
ReplyDeleteGas (nat gas) prices to rise 7% by 2020?
ReplyDeleteThey're Up 42% in the US in Six Weeks!!
TXU Energy, in the meantime, due to a large dollop (technical term) of Wind Energy has announced that the Rate from 10PM to 6AM will be Zero. Nada. Nuttin.
The Rate from 6AM to 10PM will be $0.11.
Germany (on a lattitude, roughly, with Ontario has seen their "Peak-Time Rates" Plummet due to becoming the World's Leading Solar Country.
The fossil fuel- bought and paid for Conservatives are badly on the wrong side of history on this one.
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DeleteThose who predict (relatively) free energy are kidding themselves. It's the same reasoning that says 'cold fusion' will provide us with limitless, cheap energy because it can be produced out of sea water. Or those who marvel at a 100% increase in subsidized solar energy production from its base of 1% of the total.
In the long-run (in the absence of subsidies or mandates) energy, like everything else, will be priced based on availibility of resources and facilities and ON competition, despite short-term dips or spikes that may occur.
Natural Gas? Yesterday, the prices paid for future contracts was up 5-6% but spot prices were down a couple percent and have been all year. Today's spot prices are around $2.60. Just a few years ago, they were $13 and I seem to recall around the crash or perhaps before they were in the $14-$15 range. Will they reach $20 (a 650% increase) by next February as some predict? I doubt it. But if it did, it would be a short term spike since at the $4-$5 producers would start ramping up capacity.
TXU Energy? I briefly scanned the article and it appears the reason TXU is given away the energy is that (1) they have no way to store their excess capacity, and (2) it is an attempt to shift consumer energy usage to adjust to the variability of wind power. It is naive to assume this pricing will continue forever or would have started in a non-subsidized environment. Eventually, TXU will find a way to store or transmit that excess energy to new locations or usage patterns will shift. In the mean time, enjoy it while you can.
As for never having to worry about gasoline prices when you were a kid, try reading the following article.
Nominal vs Real Prices [LINK]
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In Ms, often-times you can save hundreds of dollars/yr just by going down to Walmart and spending Seven or Eight Dollars on rubberized, stick-on weather strips for your doors.
ReplyDeleteThe thing is, we grew up in this country, not so much on cheap energy, as "virtually free" energy. I drove from Ft. Lauderdale to Cape Girardeau, Mo, once, on a full tank of gas, and $13.00 (and that 383 cu in. V-8 got about 13 mpg on the highway if I remember correctly.)
ReplyDeleteTwo questions I never asked in my youth, or working years:
1) What is the Gas Mileage, and
2) What are the Utility Bills?
Well, times have changed. Energy can still be cheap, relatively, but not if it's derived from something that comes out of a hole in the ground.
BTW, this cheap power from Wind, and Solar is giving the Utilities (most of which own Coal, and Nat Gas Plants) conniption fits. They've already screwed up and let "Wind" get a foothold in Tx, and determined not to make the same mistake again, are fighting "Solar" tooth and nail.
ReplyDeleteAgain, just like with ethanol, a lot of the most effective lobbying by the fossil fuel folks is being done, quietly, out of sight, at the State PUC-level.
Deuce, here is an excellent video that I think you should put up as a counter-point to the lead article.
ReplyDeleteExcellent Video on Wind Energy
And,
ReplyDeleteA Super-Excellent Video on German Renewable Energy
It's not a funny subject but I have to laugh sometimes. The Greens have made some doozy mistakes, especially in the PR arena (one hopes they are not too arrogant to learn from the O&G guys who really do "know their business" inside and out.)
ReplyDeleteConservation is one of those areas where mistakes were made. Similar to the idea of Prevention in healthcare, which I also initially dismissed as nibbling around the edges, a closer-in quantitative look reveals some substance worth pursuing.
The PR problem with conservation is multi-facted but (imo) goes back to the flush toilets and their current unpopularity (taking multiple flushes to ... er ... get it all down, and that doesn't even get into the water-saving washing machines), which then led to the Dixie Chicks "using one square of TP" and we're off off the races. The equivalent of a PR shredder.
The structural problem is the existing stock/fleet/buildout, as it always is. It's the modern world. We don't live in caves. Even the Greens admitted that getting all those water-saving devices into existing buildings was huge capital cost.
Weather stripping a building is still a "good thing" to do if you are of able body and able mind. But the elderly are going through serious difficulties - dealing with health care paperwork and (mis)billing, hooking up the cable, and dealing with modern energy issues. My thinking is that there is a cottage industry waiting to emerge that provides assistance to the elderly who are still capable of independent living but not some of this other stuff swirling around their heads.
(They simply can't handle it. The health care industry is *starting* to provide the services of an "advocate" who works with patients to assist in sorting through billing and intermediating conflicts in a paralegal sense. Good first start, if it ever gets traction.)
Short story: old people can't handle this stuff which means the industry needs to think about providing services that bridge the gap. Such services are outside the historic business model of most utilities (and health care) providers.
Shorter story: conservation is worthwhile but it needs an extra push to get through the elderly who are a large part of the "existing" buildout. (In point of fact that argument can almost effortlessly be extended to the next younger generation which for various reasons can't handle the mechanical details of cable hookups or weatherstripping. As I said, cottage industry in providing technical assistance services to the private sector.)
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