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Energy review spells end of the green bandwagon: Spotlight on true costs of power generation could save us billions

Energy Secretary Amber Rudd has launched a groundbreaking project to examine the actual cost of electricity generation in a move which could spell the end of billions of pounds of subsidies for green energy.

The Department of Energy & Climate Change said its aim is to look at every aspect of the cost of generating energy.

It will include not just the cost of constructing offshore wind farms, for instance, but also of connecting them to the national grid – something which critics of the green energy industry say is often overlooked by its supporters. It will also examine nuclear power and conventional energy.

The study is being conducted by Frontier Economics, the consultancy chaired by former Cabinet Secretary Lord O’Donnell.

A senior energy source said: ‘Many in the energy industry have suspected that previous governments have been “economical with the truth” about the economics of moving to a low carbon producing energy sector.

‘It may well turn out that certain kinds of renewable energy are not quite as cheap as we thought when the billions paid over the years required to support it are taken into account.’

Two years ago Prime Minister David Cameron promised to cut the ‘green crap’ from energy bills – referring to the green taxes which include the costs of insulating homes and funding wind farms and account for more than £110 of the average gas and electricity bill of £1,326.

However, this figure is dwarfed by the cost of delivering the energy to homes, which accounts for nearly £300 of the average bill.

Subsidies to enable the UK to meet its legally binding commitments to reduce greenhouse gas emissions by 2020 through the so-called levy control network are on course to reach £9billion a year instead of the expected £7.6billion.

A source said: ‘We might conclude we need less renewable energy than we thought because there are other ways of doing it cheaper – by using technology to reduce consumer demand, for instance.’

The review comes amid opposition to the Government’s plan to build two new nuclear reactors – Hinkley Point C – in Somerset. The review comes amid opposition to the Government’s plan to build two new nuclear reactors – Hinkley Point C – in Somerset.

The Austrian and Luxembourg governments last month launched a legal complaint against the Government which has been followed by a further challenge from ten German and Austrian green energy firms.

The complainants say the UK Government’s subsidies may reach £76billion and are in breach of European rules relating to state aid.