Dave Elliott: Renewable energy is getting cheaper. Generation costs have fallen dramatically in recent years and continue to do so. That means you might expect energy costs to have fallen. And they have. According to an OECD NEA report, between 2008 and 2015 low marginal-cost variable renewable energy deployment “caused an electricity market price reduction of 24% in Germany and of 35% in Sweden”. While wholesale costs may have fallen, this hasn’t always resulted in savings being passed on to consumers as reduced retail costs. The power utilities often argue that this is because they face increased overall costs. Some of these, it’s sometimes claimed, are due to the various green levies, and the losses the utilities incurred managing the system with increasing amounts of variable renewables on the grid — the so-called “system costs”, an issue I explored recently. That doesn’t seem to be the case in the UK, where energy bills have gone up much faster than the green levy and grid-balancing costs. Most of the rise has arguably been due to increased fossil fuel and supply costs. The various green energy levy surcharges, supporting the growth of renewables, have only been a small element. And the so-far small balancing costs, reflected in the levy supporting the new capacity market, have only just started to be passed through to consumers. What’s more, some of these levy costs may have been offset by consumer savings from the green initiatives – electricity use has fallen year by year.
Physics World 19th June 2019 read more »