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Think tank claims UK green energy costs far higher than stated

23 March 2015

The true cost of wind and other green power projects is far higher than the UK Government has admitted, a report from the Centre for Policy Studies think tank says, claiming renewable energy will be "the most expensive policy disaster in modern British history". The CPS estimates that UK consumers could save £214 a year by 2020 if green energy targets were scrapped and power was derived from gas-fired power plants instead. 

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The Department of Energy and Climate Change says extra charges will only be £141 per household by then.

Wind and solar farms rely on subsidies to be economically viable and these subsidies are charged to consumers through so-called ‘green levies’ on energy bills. The CPS argues that the costs of intermittent renewables are massively understated, accusing ministers of an unstated policy objective to deliberately hide the full cost and operational implications of green power.

As well as subsidies for the wind and solar farms, the CPS report points to the need for dozens of back-up power plants to keep the lights on when the wind doesn't blow and the sun doesn't shine.

Ministers have been forced to offer additional payments to gas and coal power plants because the intermittent nature of wind and solar power destroys the economics of conventional power generation.

“To keep the lights on, everything ends up requiring subsidies,” the CPS says.
The costs of new cabling to connect up wind farms in remote parts of Britain and far off the coast are also not properly reflected in current assessments, it says.

The “patchwork of interventions” is an unduly costly way of keeping the lights on, the report argues.

It suggests that if ministers want to keep to their green energy targets, they should renationalise the power generation sector, so avoiding the need to subsidise private companies to build new wind farms and other power plants for profit. Nationalisation would save consumers £92 a year by 2020, it estimates.

Ministers are backing a vast expansion of green energy under plans to help tackle global warming.

Under EU rules, the UK is required to generate 15% of its total energy – including heat, power and transport - from renewable sources by 2020. In practice, this means 30% of its electricity will need to come from renewables.

Acccording to a report in the Telegraph, official government estimates published last year show that a typical household now pays £68 a year in green levies to subsidise renewable energy projects and to fund carbon taxes - about 5% on an annual gas and electricity bill of £1,319. By 2020 the estimates suggest such levies will hit £141, or 11% of the annual bill.

This includes the costs of more wind and solar farms being built and carbon taxes rising, as well as the Government's estimate of the costs of the new scheme it is introducing to subsidise conventional power plants as backup for intermittent renewables.

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