A new report, commissioned by the Tories, has found that Ed Miliband’s Clean Power 2030 Plan will cost an extra £320 billion by 2050, compared to their own watered-down proposals which prioritise gas and nuclear, rather than wind and solar.
The report by the economic think tank Onward was originally commissioned by Claire Coutinho, when she was Energy Secretary, to calculate the overall system costs of fully decarbonising the UK’s electricity supply. It was conveniently shelved by Ed Miliband when he took office.
The extra costs are made up as follows:
- £137 billion in network spending, thanks to a higher utilisation firm power system with supply located closer to demand
- £94 billion from lower wholesale prices, thanks to the removal of carbon taxes
- £67 billion in lower spend on balancing and ancillary services
- £22 billion across generation subsidies and the Capacity Market
Some in the media have claimed that electricity bills will be cut by £540 as a result, but this is a gross misunderstanding. With the exception of scrapping carbon taxes (worth about £5 billion a year), which will have an immediate effect on bills, the ‘savings’ refer to limiting future increases in bills as a result of Labour’s plans.
In short, Miliband’s plans, which remain official Government policy, will massively increase the price of electricity. The Tories say they can mitigate some of this – but not all.
We need to remember that decarbonisation policies have already cost the public well in excess of £200 billion over the last couple of decades. The cost this year alone will amount to over £20 billion, which equates to more than £700 for every household in the country.
Tim Stanley may not have an issue with this, but millions will disagree.
Labour’s response to the new Onward report has been a pitiful attempt to deflect. New Energy Secretary Miatta Fahnbulleh made no attempt to rebut any of the technical detail, instead offering this meaningless nonsense:
Labour is investing in more clean energy jobs, cutting tax on electricity bills to give families breathing space this winter and we’re taking action to tackle the climate crisis and bring down bills for good. Kemi Badenoch would put jobs at risk and increase bills. As global fossil fuel prices continue to rise amid conflict overseas and wildfires rage across the UK, we can’t turn our back on clean power. That won’t bring down bills and it won’t address the climate crisis. The Tories don’t have a clue.
A response has, though, come from the unreliable climate lobby outfit Carbon Brief, in what they laughingly call a ‘Factcheck’.
They claim to have identified “flaws” in Onward’s analysis, but most of the points they make are simply frivolous – for instance, that it would increase carbon emissions, to which I would reply: so what?
Other criticisms include:
Gas prices
They complain that Onward have assumed “low gas prices”. In reality, they have actually used the Government’s own assumptions, which are based on international gas prices prevailing last year.
But even at the currently inflated levels, the marginal cost of a CCGT gas power plant is still lower than the contract prices agreed for new offshore wind farms.
While nobody knows what gas prices will be in years to come, replacing existing gas power with wind power will lock in high prices for 20 years.
Cost of building gas plants
Carbon Brief complain that Onward have underestimated the capital cost of building new gas power plants. But again, the latter have in fact used the Government’s own assumptions.
They miss the point that we already have plenty of gas power capacity, which should be used to the full. The cost of building new plants is therefore not relevant in the next decade.
More to the point, the grid will still need new dispatchable capacity in order to supply power when the wind does not blow. Under Net Zero plans, this will eventually have to come from gas and hydrogen plants with carbon capture. The CAPEX issue applies equally in either scenario.
Carbon taxes
Onward’s figures include a saving on energy bills of £94 billion over 20 years from the scrapping of carbon taxes. Carbon Brief claim this is false accounting, because “£94 billion is no longer going into the government coffers, so it’s not saving the country any money”.
Either they don’t understand the energy market or they are deliberately lying. It is true that the money that gas power plants pay into the UK Emissions Trading Scheme ends up in government coffers. But, crucially, the marginal cost of gas power nearly always sets the market wholesale price for all generators, other than those on CfD subsidies.
Currently, carbon taxes are adding about £8 billion a year to electricity bills, of which £3 billion ends up in government revenues. The balance of £5 billion is windfall profit for all those non-gas generators – largely renewables.
Onward’s projection of £94 billion over 20 years is consistent with that figure of £5 billion.
Network costs
Carbon Brief have questioned the £137 billion in transmission network upgrade costs claimed by Onward.
In fact, the potential savings are much greater. Ofgem have already budgeted £73 billion for work in the next four years, while NESO have said another £89 billion will be needed “beyond 2030”. That’s a total of £162 billion.
But worryingly, there is increasing evidence that these costs have been grossly underestimated. EDF have indicated that construction costs could end up tripling – which should surprise nobody who has seen the budget for HS2 balloon over the years.
Nor do Carbon Brief bother to mention the hundreds of billions that will be needed to boost capacity on the low-voltage, local distribution networks – the cables which bring electricity down our streets and the substations and pylons that feed them.
This work will be essential if we are to charge our EVs and run our heat pumps.
Nobody in Government has even attempted to put a figure on the cost of this, because the answer would be truly frightening. Instead, the can is kicked down the road.
System balancing costs
Carbon Brief also maintain that the potential savings of £67 billion have been overstated. But again, they are being economical with the truth.
The National Energy System Operator, NESO, has already forecast that the cost of balancing the grid will reach £7 billion by 2030. This includes the costs of paying wind and solar farms to switch off when they produce too much and paying for standby capacity and battery storage when they don’t produce enough.
This is an increase of £5 billion compared to current costs. As intermittent wind and solar power capacity increases, these costs will continue to grow.
The Tory plan, having said all this, is a curious hybrid.
Although they say they will scrap Net Zero, they still appear to be wedded to its aims – hence the argument that lower electricity prices will encourage everybody to buy EVs and heat pumps.
I suspect it is a way of uniting the Lib Dem wing of the party with the rest.
As a result, they will likely fall between two stools, with a mongrel energy system that satisfies nobody. To optimise costs, the 45 GW of gas capacity demanded in their plan must run 24/7, or as close as demand allows. Running them as standby, as they want, makes them much less efficient and adds to system costs.
Meanwhile, for as long as EVs and heat pumps remain part of the plan, hundreds of billions will need to be spent on the grid.
Just one more factoid to finish with.
According to Carbon Brief, the Tory plan results in an extra 524 MtCO2 being emitted between 2030 and 2050 – a tiny 26 MtCO2 a year.
The UK’s annual emissions are around 700 MtCO2, including those embedded in imported goods.
I find it astonishing that anybody is even thinking of wasting £320 billion in order to reduce UK emissions by less than 4%.
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The public are being convinced by the Political Class that there is a climate emergency and that they must get rid of affordable electricity and use unaffordable electricity. But since the UK is only responsible for 1% of the alleged emergency whatever we do here in the UK will make not the slightest difference to it.
When you do something that will make no difference it means you are not doing for the reasons you say you are. In other words you are pulling a fast one. Climate Politics is the biggest fast one ever pulled.
The Tories had 14 years to prioritise gas and nuclear, which any sane person knows are the short and long term sources of power respectively. But they didn’t. And now they propose it from a position of no authority. They make me sick.
The CON policy won’t “encourage” people to get an EV and a heat pump when they don’t want them for perfectly sensible, practical reasons.
I can’t charge an EV at home. My house is not suitable for a heat pump. Those FACTS aren’t going to change – and neither is my mind.
National Grid made an estimate of Net Zero costs – 2020 to 2050 – of roughly £3 trillion, so about £100bn a year.
My household bill was circa £850 a year in 2015. It is now £1,700, and I have been told will rise to around £1,900 next year.
Net Zero is an uncosted policy and it is sad to watch the UK bankrupt itself chasing it.
The amount I have spent on energy so far this year was enough for a complete year back in 2019.
Scary pic. Nothing behind the eyes (or between the ears).
Is now the time to admit that our entire government structure, the civil service, judiciary, and public sector is nothing but a gigantic criminal enterprise that makes the Sicilian Mafia look like school kids.
Now’s as good a time as any, Neil.
But 30 odd years ago would have been better.
I’m in my late 50’s now, and they’ve all been one big bunch of lying thieves my entire adult life.
Gosh who would have thought that the Tory promise to abandon net zero was a sham?
£320bn over 20-odd years is about £300 a year per adult. Still a complete waste of money but not so much that the fanatics will be deterred.
Nonetheless, you can only spend a £ once. My preference would be to pay down the National Debt at a rate of £15bn a year. If saved interest payments were also applied, by 2050 it would be nearly halved. If we also halted immigration and got drilling we’d be rich as Norwegians.
That’s the real price of Net Zero.
Remember that Net Zero makes everything more expensive on top of that £300 a year.
How does that compare with the amount given in the cost-benefit report submitted to Parliament when Mrs May put Bet Zero 2050 into law. What do you mean it was nodded through without debate or costing. Surely no(sarc).
And what did the cost benefit statement say for each year thereafter when all but five Tory MPs voted in favour of the climate change act. They voted alongside Labour, LibDems and the rest in a display of lemming like disconcern at the likely outcome.
Tories are at least as responsible as Labour so don’t let them get away with it.
The target of zero was set by issuing a Statutory Instrument which does not follow the consultation, debate, ping pong etc of an Act. On the plus side the target can be changed using the same method when we get adults in charge.
The green blob continuously tells us that the impact of man made climate change is not just financial but ecological. So how about this, the destruction of a healthy badger sett in Staffordshire for a solar farm that doesn’t yet have full planning approval https://share.google/SfpZqGhlRnxeVwVpl .
Or what about the recent reports of the destruction of vital peat fields in the mountains of Wales and Scotland to plant the massive concrete bases of the new supersized windmills? This is releasing co2 into the atmosphere well in excess of the amount the windmill could ever reduce, so how is that achieving their ecological targets. They are just vandals destroying the countryside
And the deaths of raptors and Whales and other bird and marine species.
Also the adverse effects on people caused by the noise of windmills and the anxiety from fear of poverty and cold winters.
I’ve seen a windfarm being constructed, it was a major industrial site that must of had over 100 people working on it. Given the location all these people had to commute 30 miles or more everyday and hadn’t heard about car sharing, there was a large increase in traffic at 5p.m. every working day. How much CO2 did this release given that construction took at least 6-9 months?
The site wasn’t located on deep peat so the space that the bases occupied had to be blasted out of the bed rock. It was possible to hear and feel the vibrations from the blasting several miles away.
In terms of the amount of environmental destruction compared with the amount of energy generated small scale run of the river hydro schemes are almost certainly far worse than wind farms. Most of the schemes have a capacity of 2-4MW, less than most onshore turbines. Because they had to leave a certain amount of water in the, very small rivers, output is dependent on rainfall, over the course of a year the load factor is about 35% which is roughly the same as onshore wind turbines.
10 years ago 2 of these schemes were… Read more »
The Net Zero mob don’t appreciate nature. Perhaps because deep down it isn’t about saving nature, the environment, or the planet. It’s about controlling the people.
The gross stupidity, bordering on criminality is the total lack of comprehension that in reality, CO2 is an essential chemical compound necessary to support life and comprises about 0.043% of Earth’s atmosphere (International Energy Agency).
Of that proportion, about 0.8% is emitted in the UK by fuel combustion and the general trend is reducing. Thus, even if CO2 is a proven factor in so called global warming, if it is actually happening, which is debatable, any reduction by the UK in the arbitrary target of net zero by 2050 is unlikely to have any discernable effect on the Earth’s atmosphere.
That surely doesn’t warrant compromising the country’s economy at vast cost to long suffering taxpayers, made worse by incompetent governments, not least by the climate change act being nodded through into law without parliamentary debate or any cost/ benefit analysis. Thank you Theresa May.
It is a classic case of scaremongering and ‘gas lighting’ by the elite with no proper thought to the consequences. It will end badly for the UK whereas other countries have realised the absurdity and have reversed their direction of travel.