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Britain’s Green Energy Fiasco Deepens

Tim Webb & Ben Webster

Families face paying up to £40 extra each year for wind and solar farms to meet climate change targets after the government revised its energy price forecasts.

Graphics: Global Warming Policy Forum based on DECC 2012, 2013 & 2014 price projections

The subsidy required for each unit of renewable electricity will rise after the Department of Energy and Climate Change (DECC) conceded that gas was much cheaper than it had predicted.

A glut of gas on the world market means gas-fired power stations have become cheaper to run, making wind and solar farms comparatively even more expensive.

The new forecasts undermine the government’s claim that renewable energy is becoming more competitive. Analysts said that ministers could be forced to increase the budget for renewable energy subsidies, set at £7.6 billion in 2020, so that they meet the EU’s legally binding renewable energy target.

The DECC has “headroom” to increase the budget by 20 per cent, which could push up the bill for consumers by another £1.5 billion per year, equal to about £40 extra on household energy bills.

Mateusz Wronski, an analyst from Aurora, the energy research firm, said: “The new calculations definitely make overshooting the budget more likely.”

John Constable, director of the Renewable Energy Foundation, which opposes subsidies, said: “The government gambled on a high gas price and seems to be losing badly, meaning that the true cost of renewable energy could be billions of pounds more than expected.”

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