Use of renewables could lead to higher bills - 24/10/2011

The drive to increase the percentage of the UK's power supply that is derived from renewable sources could lead to higher electricity prices in the future.

According to an article in the Guardian by Michael Pollitt, assistant director of the Economic and Social Research Council Electricity Policy Research Group, this will be to due to the increased cost of green energy sources, as well as additional taxes for high-carbon power.

He explained the expense of generating energy using onshore wind power is around 50 per cent higher than utilising conventional sources at the moment, while costs for offshore wind are around 250 per cent more expensive.

Dr Pollitt explained: "If half of UK electricity were to come from an equal combination of onshore and offshore wind, this would raise the wholesale price of electricity by 50 per cent."

He also suggested costs would be affected by the impact of green taxes, noting that under current projections, these will rise from their present level of £10 per tonne of carbon dioxide up to £70 per tonne by 2030.

This would lead to a hike in wholesale electricity prices of 40 per cent, the expert said, while if the levy were to be applied to gas wholesale costs could increase by 70 per cent.

He therefore observed that if the EU is serious about meeting its objectives for green energy generation, this will inevitably see costs for gas and electricity rise.

In response, Mark Todd, Director at energyhelpline commented “Dr. Pollitt’s research shows that energy bills are on the rise not just due to increasing wholesale costs of gas but also the expensive greening up of generation. In this climate, bills will keep on rising aswell as the savings customers can get by switching.”

You could save up to £389 on your gas and electricity by switching – you can compare prices at energyhelpline.com or call 0800 074 0745