September 1, 2013
U.K.

Businesses protest over cost of green energy reforms

By Emily Gosden | The Telegraph | 31 August 2013 | www.telegraph.co.uk

Businesses have voiced their concern over the costs of the £110bn “green” overhaul of Britain’s energy sector and believe it risks making the country uncompetitive.

Three quarters of major energy users said they were worried about the impact of the reforms on their businesses, according to research by supplier npower.

Ministers are pushing an Energy Bill through Parliament that will introduce billions of pounds of long-term subsidies for low-carbon power sources such as wind farms and nuclear reactors.

The plants are intended to replace older, dirtier coal plants that are being switched off so Britain can meet legally binding carbon emission and renewable energy targets.

But the green technologies are not commercially viable to build without the subsidies, which will be paid for through levies on energy consumers’ bills.

Intermittent new sources of power such as wind will also make the economics of building gas plants more difficult, as they will no longer be able to operate the entire time. There will be incentives for new gas plants to operate when needed, such as when the wind does not blow, in a policy described as “an insurance premium against the risk of blackouts”.

Official figures suggest the unit price of electricity has already risen by 30pc as a result of the policies and that prices will have risen by 50pc by 2020. However, ministers insist the policies will be cheaper than doing nothing because they say gas plants will only become more expensive to run.

An npower survey of 66 senior energy managers from major UK industrial and commercial businesses and energy consultants showed that less than half understood exactly how their businesses would be affected.

Three out of four said they were concerned over the reforms. Most cited costs as their leading concern.

Wayne Mitchell, npower’s industrial and commercial sales and marketing director, said: “It is revealing that businesses are worried about the impact on UK competitiveness, as the last thing Government will want is businesses moving abroad as a way around EMR [energy reforms].”

The warning echoes those by manufacturers’ organisation, the EEF, which has said that “unless we get a grip on spiralling policy costs, steeply rising electricity prices for the rest of the sector risk making the UK an increasingly unattractive location for industrial investment and undermining efforts to rebalance the economy”.

Ministers have already proposed schemes to exempt major energy users from some of the costs of the reforms. But critics say they do not go far enough to help offset the costs.