A new report, published by the UK Centre for Policy Studies, claims that renewable energy policy is the most expensive domestic policy disaster in modern British history.
Read the official press release below:
In a new report Central Planning with Market Features: how renewable subsidies destroyed the UK electricity market , published Wednesday 18 March, Rupert Darwall shows that recent energy policy represents the biggest expansion of state power since the nationalisations of the 1940s and 1950s – and is on course to be the most expensive domestic policy disaster in modern British history.
Darwall shows that:
Including capacity to cover for intermittency and extra grid infrastructure, the annualised capital cost of renewables is approximately £9 billion. Against this needs to be set the saved fuel costs of generating electricity from conventional power stations. For gas, this would be around £3 billion a year at current wholesale prices, implying an annual net cost of renewables of around £6 billion a year.
Intermittent renewables destroy markets
The above analysis leads to a straightforward conclusion. You can have renewables. Or you can have the market. You cannot have both.
There are therefore two options to align ownership and control:
Nationalisation removes political risk thereby cutting the sector’s cost of capital. Together with the savings from abolishing retail competition, it would cut average bills by around £72 a year now, and £92 from 2020. By contrast, ditching the renewables target and returning the sector to the market would save households around £214 a year, assuming gas replaces renewable power. This option would depend on securing a permanent opt-out from the EU renewables directive and any successor policy imposing targets on individual member states.
Sir Ian Byatt: “Ministers have destroyed the emerging electricity market while talking of how it could improve competitive processes”
As Sir Ian Byatt comments in the Foreword to the paper: “Ministers have destroyed the emerging electricity market while talking of how it could improve competitive processes. They and their advisers have not understood that effective competition proceeds from the right structure of suppliers and works in innovative, not predictable ways… Good intentions in the form of a desire to save the planet have led to our impoverishment. We need better analysis, greater transparency and more effective discussion of social and environmental issues, not Whitehall playing shops. Rupert Darwall provides us with the tools for such discussions in the area of energy and, in his policy lessons, points us towards better approaches.”
Source: CPS; Image: Rupert Darwall/Twitter