From NOT A LOT OF PEOPLE KNOW THAT
By Paul Homewood
We are used to seeing broken promises from politicians. But this new campaign promise from the Lib Dems is simply fraudulent:
Families and pensioners are being clobbered with energy bills that are still more than £50 a month higher than they were five years ago. And businesses are suffering too.
Generating electricity from solar or wind is now much cheaper than gas. But people aren’t seeing the benefit of cheap renewable power, because electricity prices are still tied to the price of gas.
Years of terrible energy policies under the Conservatives pushed up everyone’s bills, and this Labour Government has failed to prioritise cutting them.
The Lib Dem plan would break the link between gas prices and energy costs, so people can enjoy the benefits of cheap, clean power. This would halve bills and save families £870 a year on average.
https://www.libdems.org.uk/energy
Let’s start with the easy bit:
“This would halve bills and save families £870 a year on average.”
According to OFGEM, a typical 2-3 bedroom house uses 2700 kWh a year, which at the new cap of 24.67p/kWh works out at an annual cost of £666. So how can electricity bills be cut by £870?
Although they talk of “energy costs”, their proposals will obviously not cut gas bills.
They also lie about “Generating electricity from solar or wind is now much cheaper than gas”.
This is simply not true.
In the last financial year, 74.1 million ROCs were handed out to wind and solar generators. Each is worth around £70, meaning that these generators are subsidised to the tune of £5.2 billion a year, equivalent to £98/MWh.
https://www.gov.uk/government/statistics/energy-trends-section-6-renewables
They each receive subsidies on top of the market price they receive from sales, which has been around the £80/MWh mark for most of the past year:
This is why our electricity prices are so high.
It is the same story with newer generators covered by CfDs. Last year, we paid out £2.02 billion in subsidies to offshore wind farms alone, as their guaranteed strike prices were much higher than market ones.
https://www.lowcarboncontracts.uk/resources/scheme-dashboards/cfd-historical-data-dashboard
The Lib Dems are of course right to draw attention to the link between gas prices and wholesale electricity prices, but not for the reason they claim.
Their ploy is to mislead the public into believing that the pricing system stops people from benefitting from “cheap renewables”. The problem is the diametric opposite.
When gas prices increase, renewable generators make windfall profits, benefitting from higher market prices in addition to the obscene subsidies they receive on top.
That is why the link needs to be abolished. This, of course, is easier said than done, but I am sure it is not beyond the wit of even Lib Dem politicians!
A fixed market price needs to be established for all intermittent generators, at a much lower level which reflects their inherent lack of value.
A separate market needs to be established for dispatchable generators, who can supply power as and when needed. This would work in the same way as the current system.
About a quarter of electricity generation is covered by ROCs, around 75 TWh a year. Given they receive subsidies of about £100/MWh already, I would suggest a fixed price of, say, £20/MWh. This would save about £5 billion a year, about £180 per household.
Secondly, bearing in mind the current spike in energy costs triggered by the Iran crisis, the Government should IMMEDIATELY suspend the Emission Trading Scheme until further notice.
According to EMBER, carbon costs accounted for a third of wholesale electricity prices last month. Suspension would lead to an immediate saving of £7 billion a year.
https://ember-energy.org/data/european-electricity-prices-and-costs/
