A new report says electricity bills will increase by around 25% in order to pay for new wind turbines and other sources of renewable energy.
The Government has said in the past that energy efficiency savings will help to reduce energy bills but the study by the Renewable Energy Forum (REF) claims in actual fact many will be worse off with a rise in both domestic and business electricity prices.
REF has analysed Government figures and found that even if its targets for energy efficiency are met, around 17 million households will be worse off. According to The Daily Telegraph the report says the “DECC has made unrealistic assumptions about the use of energy efficiency measures to offset the costs to households, but even on those optimistic assumptions 65 per cent of households will still be net losers”.
The report claims that climate change policies will be responsible for significant increases in both gas and electricity prices.
It’s not just householders who will be affected either. While the report suggests domestic energy bills will increase by around 27% by 2020, it also suggests that medium sized businesses will find their energy bills increase by around 34% over the same period.
The cost of renewable energy is a continuing argument and cause of tension in the Government. In February, Utility Exchange reported that a number of Conservative MPs demanded a cut in wind farm subsidies a few days after the then Energy Secretary, Chris Huhne, resigned.
However, a spokesperson for the Department of Energy & Climate Change, said a “diverse energy portfolio is crucial for our energy security and to shield our homes and businesses from the sort of price shocks that we’ve seen filter through into our energy bills as a result of rocketing global gas prices”.
He added “We are going to revolutionise the energy efficiency of millions of homes and businesses across the nation through the Green Deal which will launch later this year”.
The Energy Secretary, Ed Davey, said that climate change policies could help to reduce the negative impact of spikes in oil and gas prices. He said the impact of these spikes could be reduced by 50% in 2050 thanks to climate change policies.
His comments were based in analysis commissioned by the Government. The Oxford Economics analysis shows that sensitivity to global price changes could be reduced by the use of sources of renewable energy, new nuclear power plants and an increase in energy efficiency.
Mr Davey said “Of course, there are costs to building more low-carbon plant, but the gains are so much greater, and crucially they are lasting”.