Green levies helping to support supposed cheap wind and solar power have soared in Labour’s Budget and will quickly add many hundreds of pounds to household electricity bills. This shock news is to be found in the details released by the Office for Budget Responsibility (OBR). Needless to say, no mention was made of the sudden subsidy spike in the Chancellor’s Budget Statement to Parliament. But the detailed figures reveal that the levies are set to confiscate £16 billion a year from consumers from next year. This is equivalent to nearly £600 a household, but the situation is only likely to get much worse with the Mad Miliband committed to a 95% renewable grid within six years.
The problems don’t stop there. A renewable grid based on breezes and sun beams needs back-up when Mother Nature fails to co-operate. Earlier this week, the wind stopped blowing for a couple of days and minimal power was obtained from this source. The pretence that there is any realistic back up other than a secondary gas-based system is fading fast. Fintan Slye, the head of the operation controlling electricity supply into the grid, recently noted: “There will continue to be a significant amount of power plants in reserve for the cold, dull, windless weeks of winter, but they will run for limited periods.” To date we have yet to have sight of an official estimate of what all this might cost.
In the meantime, and it seems just for starters, British consumers have £16 billion to find every year, as the graph below compiled by Andrew Montford from Net Zero Watch shows.
Montford shows that the estimated cost of green levies (mostly renewables) has shot up in the last 18 months with estimates rising between 20% and 120%. In its report, the OBR blames the jump on the Contracts for Difference (CfD) scheme that compensates suppliers for low electricity prices but claws back money when rates rise above a certain level. Loosely-worded contracts seem to mean that money only flows one way into the pockets of the subsidy-hunting turbine owners. Montford notes that the OBR is “no longer pretending” that CfD contracts will be paying back to consumers “in the foreseeable future”.
The figures involved are staggering. Montford explains that 18 months ago the OBR was predicting that CfDs would save consumers nearly £10 billion between 2023-24 and 2028-29. However, six months ago, “they decided it would actually ‘cost’ us £9 billion. And today they have announced that it will cost us £12 billion”, he added. Faced with these figures, the general public may recall that one of the first actions of the incoming Labour Government was to abolish an annual winter fuel allowance for older people, saving just £1.5 billion. Some might observe that such a sum is little more than a rounding error in the fantasy world of green economics and subsidies.
The environmental levies cover a variety of green rackets from paying suppliers to produce uneconomic and environmentally unfriendly energy, to persuading consumers to buy inferior technologies. The investigative journalist Paul Homewood has been digging into the subsidy figures for years amid promises from politicians that “rapidly falling” wind power costs would bring bills tumbling down. “Now we know that was always a lie,” observed Homewood last year.
In fact, Homewood suggests, an even greater burden is being placed on U.K. electricity consumers. The feed-in tariff scheme that pays consumers for electricity generated from solar panels has been excluded by the OBR. Although the scheme is no longer open to new applicants, it is yet another subsidy and still costs almost £2 billion a year. The renewable heat incentive is another £1 billion plus boondoggle ignored by the OBR, while the climate change levy, added to business costs, chips in another £2 billion.
All in all, Homewood estimated last year that Net Zero taxes and levies were set to cost the British consumers almost £100 billion over the next six years. The Labour Budget just put that up by at least £25 billion. The Net Zero black hole gets bigger by the day.
Chris Morrison is the Daily Sceptic’s Environmental Editor.
To join in with the discussion please make a donation to The Daily Sceptic.
Profanity and abuse will be removed and may lead to a permanent ban.