Nick Timothy: It was reported this week that the estimated cost of energy produced by new offshore wind farms has halved in two years. Many observers seemed to conclude that Britain’s energy problems have been solved. The truth is rather different. Britain still has significant trouble with its energy retail market, its power generation, and its energy strategy. All three require decisive government action. The retail market is supposed to be founded on competition, with consumers switching between companies and tariffs. In practice, only a quarter of households have ever switched tariff with the same provider, and less than half have ever switched supplier. The big energy firms rip off customers who do not switch. Two thirds – 18.5 million households – are on expensive default contracts. We need lower prices, and to get them we need a new energy strategy based on competition and a sensible regulatory framework. For that to happen, there must be meaningful price transparency for all forms of power generation, including nuclear power and renewables. This will require a new approach to reducing carbon emissions. There is no need to abandon our international commitments, and no need to abandon the Climate Change Act. We should, however, change the trajectory of Britain’s decarbonisation plans, so a greater share of the reduction comes later, through technological innovation, rather than earlier, through the imposition of higher energy costs and lower industrial output. This would allow us to take sensible measures, like reducing Britain’s carbon price, which increases costs by pricing every tonne of carbon dioxide at three times the level set by the EU’s Emissions Trading System. It would also allow us fully to exploit the opportunities that lie in Britain’s shale gas reserves. Proper price transparency and competition should mean no more subsidies for renewable energy. The Government has set out its intention to reduce these costs, but Britain has spent over £23 billion on subsidies for renewables since 2002, and now is the time to phase them out completely. With the falling price of offshore wind, this should not be a problem. Wind power is still expensive: its intermittency causes higher costs elsewhere in the system, and this should be reflected in estimates of wind’s true cost. But it will almost certainly play an important role in Britain’s energy mix and, if its supporters are correct, it should not need subsidies to do so. Price transparency would also mean no more nuclear deals without price competition from other providers. It might therefore mean no new nuclear at all, and it should certainly mean no new deals like Hinkley Point. And it would mean an end to long-term renewable contracts with guaranteed excessive prices. Instead, energy technologies would compete against one another on a level playing field. That would mean a more rational energy market, with prices that are fairer for households and more competitive for industry.
Telegraph 13th Sept 2017 read more »
