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Green Subsidies Will Continue To Push Up Power Prices For Years To Come

February 11, 2020

By Paul Homewood

 

 

 

When we talk about the impact of household energy bills of switching from gas to electricity, we need to bear in mind that electricity prices are going to be forced upwards in the next few year by new, subsidised wind power coming on stream.

 

Currently it is estimated that green levies will increase by a further  £2.0bn by 2023/24:

 

image

https://obr.uk/efo/economic-fiscal-outlook-october-2018/

 

On to that we must add the subsidy for Hinkley Point, due to be commissioned in 2025. When fully operational, this will add another £1.4bn.

These increases will add about 7% to household electric bills, making the switch more painful still.

9 Comments
  1. John Cullen permalink
    February 11, 2020 8:06 pm

    To reach “Table 2.7 Environmental Levies”, follow Paul’s link and search for the XL spreadsheet entitled:-
    Supplementary_fiscal_tables_receipts_other_October_2018.xlsx

    I had to plodge around a bit before I located it as there are many files/links that you could follow in error.

    Regards,
    John.

    • It doesn't add up... permalink
      February 11, 2020 8:53 pm

      Amazingly we have had no substantive update in over a year. There is a March 2019 version, which strips out the capacity market figures because that was sub judice by the EU. Of course, those are now reinstated. There are extremely minor revisions to some of the other figures.

      The cost of CFDs relies heavily on assumptions about CFD marker prices, as well as actual wind production. I’d argue that constraint payments also ought to figure in the numbers of environmental subsidies. It is starting to look as though CFD subsidies may have been significantly underestimated. If when the wind blows we get low prices with maximum production there will be heavy subsidy on high volume, with reduced subsidy only when prices are higher and winds are light. Assuming that the subsidy can be calculated from estimated gas generation prices looks to be way too optimistic, partly because those are also estimated to be much higher than actual gas based prices.

      None of this includes the extra costs for the grid, both in managing the intermittent renewables output, and in extra transmission capacity to allow remote wind power to be delivered to consumers. Policy that starts requiring local distribution grids to be beefed up will add another massive layer of cost, and also disruption, as streets and gardens are dug up for new cables and transformers. Switching from gas to electricity is going to be very expensive in many different ways.

  2. Jackington permalink
    February 11, 2020 8:15 pm

    It doesn’t matter, because we are saving the planet (allegedly)

  3. February 11, 2020 10:04 pm

    Utter madness. When will it end.

  4. Nancy & John Hultquist permalink
    February 12, 2020 3:00 am

    The new fancy green electrons cost more than the old beige ones.

    • It doesn't add up... permalink
      February 12, 2020 12:22 pm

      I think we need some antigreen quarks.

  5. February 12, 2020 10:05 am

    electricity prices are going to be forced upwards in the next few years by new, subsidised wind power

    A ‘clean energy analyst’ just told us we need 20 times more wind power.
    https://tallbloke.wordpress.com/2020/02/10/the-road-to-net-zero-according-to-bbc-science/

    The madness keeps getting worse.

  6. Gerry, England permalink
    February 12, 2020 1:53 pm

    When will it be updated for the actual figures for 2018/19 I wonder.

    As regards the joys of our dumb future, look at Jo Nova’s latest post on South Australia.

  7. February 12, 2020 2:48 pm

    I like that cartoon. The only “green” in “green energy” is the huge amount of cash it costs. Wind and sunshine are “green”, but the materials acquisition, transport, manufacturing, installation, infrastructure, maintenance, and proper disposal after a short useful lifespan are not “green” nor “renewable”. Quite the opposite … environmentally harmful and unsustainable without huge expense. “Hugely expensive and environmentally irresponsible and unsustainable alternative energy” is more like it, but a bit of a mouthful. Maybe we should simply call it “red” energy since it will push most government and private expense accounts into the “red” to pay for it.

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