U.K. consumers can expect higher utility bills no matter which party wins tomorrow’s election, with all three pushing to get more electricity from renewable sources and from plants that burn coal more cleanly.
Prime Minister Gordon Brown’s Labour Party, the Conservative opposition and the Liberal Democrats all want to reduce greenhouse gas emissions and the nation’s reliance on imported fossil fuels by installing wind turbines and building plants that inject carbon dioxide into rocks underground.
“Investment in the infrastructure needed to transition Britain to a low-carbon economy is part-financed by subsidies paid for through consumer energy bills,” said Ben Caldecott, head of policy at Climate Change Capital in London. “All things being equal, this will increase average energy bills.”
During the next decade, Britain must replace up to 30 percent of its capacity for power generation capacity as aging plants end their life in service. The government also wants to cut carbon emissions blamed for damaging the Earth’s climate. About 200 billion pounds ($303 billion) may be needed, some from utilities including E.ON AG, Centrica Plc and Electricite de France SA, according to Ofgem, the nation’s energy regulator.
“If you left the market to itself, it would tend to build gas turbines, because they’re the cheapest form of generation to build in terms of up-front capital costs,” said Charles Yates, associate director on energy Grant Thornton International Ltd., an accounting firm.
Russian Gas
The U.K. currently gets about 46 percent of its electricity from gas-fired power plants, 31 percent from coal and 13 percent from nuclear power. For gas, that share has risen from less than 1 percent in 1980.
None of the parties “wants to be too dependent on Russian gas, and also they want to have a diversified series of sources of energy,” Yates said. “The implication is higher electricity bills.”