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Move to renewables ‘will add £200 a year to energy bills’

New report warns that renewable is not yet economically viable

green homeThe country’s shift from fossil fuels to alternative energy sources will cost the average household £600 a year by 2020, with £200 of this being paid through energy bills, a new report has calculated.

John Constable, director of the Renewable Energy Foundation, estimates that the cost to the nation’s energy customers in green energy subsidies will pass £16 billion a year within the next seven years.

The result could be the first decline in living standards for hundreds of years as more people fall into fuel poverty while their energy bills escalate.

Double impact

“Shifting to current renewables for the bulk of our energy would result in a reversal of the long-run economic trend for the since the start of the industrial revolution,” Dr Constable predicted.

The report, entitled Are Green Times Just Around The Corner?, suggests that converting the power from fossil fuels into green energy by 2020 is not only economically unviable, but will have a long-lasting negative impact that far exceeds the anticipated benefits.

“The fact is that renewable energy is still far from competitive with fossil fuels, and nowhere near as economically productive,” he added.

“More people would be working for lower wages in the energy sector, energy costs would rise, the economy would stagnate, and there would be a significant decline in the standard of living.”

Hard target

In the report, which was carried out for thinktank Civitas, Dr Constable notes that Britain’s energy consumption from renewables must hit 15% by 2020, but currently stands at around 6%, which costs consumers around £2 billion every year.

According to the expert, the cost of the Renewables Obligation will need to rise to around £8 billion by 2020 to meet the targets, which will see around £200 a year added on to the average family’s energy bills.

Dr Constable notes that this is one of the largest proportional increases in the EU, and will mean that the UK is burdened with 25% of the total bloc-wide cost of the directive.

In total, based on 26 million UK households, the full impact on consumers will be around £600 per household, which will remain that way for at least a decade, he estimates.

Nowhere to run

“One-third of this cost would hit households directly through their electricity bills, regardless of income, making it an intensely regressive measure. The remainder of the cost would be passed through from industrial and commercial customers and eventually be met by households from increases in the cost of living,” the expert elaborated.

Commenting on the report, Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said many people will be “disgusted” at how much of their cash is subsidising green energy, as families struggle to make ends meet.

He told the Daily Mail: “Millions of people are worried about the cost of living, yet the government’s own policies are making bills even more expensive for households up and down the country. Ministers should be looking to reduce the burdens they are placing on people by scrapping expensive green taxes and subsidies which are unnecessarily pushing up our energy bills.”

However, the government defended the green policy, claiming that the cost of renewables is coming down, rather than rising.

No retreat, no surrender

A spokesperson for the Department of Energy and Climate Change said that the government “does not recognise the numbers” and argued that renewable energy is helping to support growth through jobs and investment.

“We’ve already cut the subsidies for onshore wind and solar and in future all green technologies will have to compete to deliver the best bang for the buck,” the representative stated.

With further announcements on the coalition’s long-waited Energy Bill due in the coming weeks, consumers will be waiting with bated breath to see the impact that the legislation will ultimately have on their finances and, subsequently, their standard of living.