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Switch to ‘green’ energy sources will push up electricity bills by 25%, admits Government

Electricity bills will rocket by almost a quarter as a direct result of ‘green’ targets, the Government’s own advisers warned last night.

A study by the Committee on Climate Change set out to debunk ‘myths’ about the impact of controversial EU climate change targets.

But its experts found that switching to wind farms and other ‘green’ sources of energy will lead to a significant hike in electricity prices.

The study concluded that electricity prices are likely to rise by 41 per cent by 2020 in real terms – with more than half the increase a result of switching to ‘low carbon’ energy sources.

In total, ‘green’ measures will add 23.8 per cent to the price of electricity.
The impact on families will vary according to consumption, but the report found that those whose homes are heated by electricity could see their annual bills rise by more than £400.

The analysis also suggests that a new ‘carbon price floor’ – introduced on the pretext of cutting carbon emissions – will effectively act as a tax, raising £3billion a year for the Treasury from electricity consumers by 2020.

The CCC’s report suggests that people whose homes are heated by electricity will see their average bills rise from about £1,500 to £2,100 in 2020.

Around £400 of the projected increase is directly related to ‘low-carbon measures’.

It suggests typical dual fuel bills will increase from £1,060 in 2010 to £1,250 in 2020 – although this assumes that gas consumption will be 20 per cent lower.

But the report also found that green measures were not largely to blame for the recent steep rises in fuel prices, adding just £75 a year to the typical bill.

David Kennedy, CCC chief executive, said its ‘best estimate’ was that green measures would add only £110 to the typical annual fuel bill by 2020. And he claimed much of this could be offset if people insulated their homes and bought more efficient devices, such as fridges and washing machines.

But Mr Kennedy acknowledged that families using large amounts of electricity would face much higher rises, as the switch to green energy will have a greater impact on electricity prices than gas prices.

Britain has signed up to EU climate change targets which commit us to cutting carbon emissions by 20 per cent by 2020.

The CCC’s forecasts assume that the new generation of offshore wind farms needed to hit the 2020 target will cost £30billion. But many experts believe the final bill will be much higher.

Last weekend at a summit in South Africa, Climate Change Secretary Chris Huhne agreed to sign up to even tougher targets.

Last night Consumer Focus warned that the main price rises from the switch to ‘green energy’ were still to come.

Audrey Gallacher, director of energy at the watchdog, said: ‘Measures which are essential to make our energy supply greener and more secure are having an inevitable impact on consumers’ bills, and that impact will increase over the coming years.’

She said revenue from green taxes should be used to help families insulate their homes.

Former Trade Secretary Peter Lilley said Government policy appeared to be based on pushing up fuel prices to limit consumption.

He added: ‘The truth is that we do not yet know how big the effects of carbon dioxide are on the temperature, still less the balance of harm it will do.

‘We are penalising the current generation on the basis of protecting future generations from an unknown threat.’