Britain to have the world’s most expensive electricity

Recently I received a copy of Energy Focus, a journal of energy studies published by the Parliamentary Group for Energy Studies in Westminster.   Very formal it was, with a portcullis on the front and a picture of the Palace of Westminster.
 
I have to be honest and say that I find these worthy publications very dry indeed, but I was flicking through on the off-chance of finding something interesting before committing the booklet to File Thirteen.  My prejudices were confirmed by the Select Committee Reports and Enquiries, and I was further discouraged by a Major Energy Policy statement from the Rt. Hon. Chris Huhne.
 
But just as File Thirteen loomed, I came across an article by the redoubtable Ruth Lea, who is always worth reading however dry the topic.   Last night over dinner I settled down with Ruth (speaking metaphorically) and read the whole piece.  It was entitled “British Energy Policy and the Threat to Manufacturing Industry”.  Ruth co-wrote it with Jeremy Nicholson, Director of the Energy Intensive Users Group, whom I have met a number of times in Brussels and elsewhere.  I should add that the piece is an extract from a Civitas paper (July 2010).
 
I’m glad I read it, but it didn’t do much for my digestion.  Of course I’ve been broadly familiar with the problem for some time, but with her usual clarity and perception, Ruth set out the facts and the risks in uncompromising form.
 
The conclusions are simple.  Britain’s current energy policies, based on challenging (or fanciful) renewables targets at the behest of the EU, and relying largely on wind power to deliver our renewables, will increase domestic electricity prices by 33% by 2020, and increase business prices by 70%.  We shall have electricity prices amongst the highest in the world.  Our industry will be hugely disadvantaged within the EU against other member-states, and in the meantime the EU as a whole will be similarly disadvantaged versus the rest of the world.
 
The reason that Britain suffers disproportionately from EU policies is two-fold.  First, we start from a lower renewables base than other countries.  And second, we rely heavily on wind, which is expensive to start with, and intermittent, and requires conventional back-up.  In effect, we have to invest twice — once for wind turbines, and again for (usually gas-fired) conventional back-up.
 
The result of these eye-watering electricity prices will be that energy-intensive industries will be forced off-shore, and probably out of the EU entirely.  These are industries like steel, glass and ceramics, bulk chemicals, industrial gases, aluminium and cement.  This is the very manufacturing sector that David Cameron is relying on to “rebalance the economy”.  And the bitter irony is that they will go to jurisdictions with lower environmental standards, and the net effect in global terms will be more emissions, not less.
 
The report highlights the case of the chlor-alkali industry (of which I previously knew zilch).  But closure of the sector could cost 87,000 jobs, including related jobs in other sectors.  And a loss of £1.6 billion revenue to the government.
 
Whether it’s financial regulation, or battery hen cages, or carbon taxes and energy policy, we find again and again that EU initiatives drive business and investment and jobs out of the EU entirely.  And viewed in the round, they usually increase the problem they’re designed to solve.
 
For more on the economics of wind turbines, there’s an excellent article by John Constable of the Renewable Energy Foundation at http://is.gd/kxvhC.

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3 Responses to Britain to have the world’s most expensive electricity

  1. Peter Hulme Cross says:

    What is extraordinary is that it is deliberate Government policy to make energy more expensive, to drive industry away, and to condemn tens of thousands if not hundreds of thousands of people to fuel poverty where the cost of heating exceeds 10* of their income.

    Central to this is EU policy, as you point out, but consider the culprits involved on this side of the Channel – Ed Milliband who steered the Climate Change Act 2008 through Parliament, Chris Huhne, Secretary for Energy and Climate Change, an eco-zealot who is responsible for the wind farm policy, and David Cameron, our ‘blue is the new green’ Prime Minister who is a ‘true believer’ of all this eco-drivel. By the time the results of this completely mad policy come home to roost, these people will have moved on and will never be held accountable. Most likely they will have been showered with Honours for their abject failure.

    You may like to have a lok at this article about the new Thanet wind farm off the Kent coast.

    http://www.telegraph.co.uk/comment/columnists/christopherbooker/8025148/The-Thanet-wind-farm-will-milk-us-of-billions.html

    Note the 100 wind turbines cost £780 million, so £7.8 million each, and then look at the cost of the subsidy for the next 20 years!

  2. This is very worrying news, particularly for UK businesses and households. Of course, the smaller businesses and households with lowest incomes are likely to suffer most – as a result. Clearly, these recent developments are symptomatic of the government’s short-term and unrealistic policies towards energy management. Peter’s observations and analysis (see above) – should also be taken into account. Wind turbines remain an eyesore for the countryside, and I pray that more local communities will resist the construction of these in their areas (using petitions, protests and other methods).

  3. I think that we’ve got one of the highest costs of living in terms of housing and food, so why not electricity too?

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