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Renewables and household energy bills: the real story with subsidies

An interview with Merlin Hyman, the Chief Executive of Regen SW.

Renewables and household energy bills and subsidies

•   Green costs cited as Port Talbot steel threat
•   Renewables boss: fossil fuels being 'propped up'
•   Clean, decentralised future is coming

Rows over household bills often seem to dominate the energy debate at the expense of everything else. 

Fingers are often pointed at renewable energy subsidies, and this has come to a head again as the Port Talbot steel plant is threatened with closure. A steelworks is naturally going to have a high energy bill, but some commentators have looked to blame 'green taxes' for this. 

Merlin Hyman, the Chief Executive of Regen SW, is on a mission to dispel some of the oft-repeated assumptions about the impact of green energy on bills. 

He said: “There is a shift towards low carbon business models in the wake of Paris. For some it would be easier if this just went away, and they still make the case that everything to do with green energy is about cost. This has to be rebutted. There is no evidence that a single company has ever left the country because of green energy policy, or that it effects UK competitiveness in a negative way.”

It seems things have not moved on all that much from WWF's 2004 'Cry Wolf' report that exposed corporate scaremongering on the cost of implementing environmental measures.

The numbers don't lie

Looking at Port Talbot alone, Hyman cites the recent news that government energy policy measures are responsible for around one per cent of its costs – and this before a rebate available to energy intensive users

On the renewable energy subsidy debate, he points out that In 2014, green subsidies were responsible for £45 of the average £1,369 household dual fuel bill. 

So what of dirtier alternatives? Well, the UK is the only G7 nation to be increasing fossil fuel subsidies. The North Sea oil industry is predicted to be a £1billion burden on the taxpayer next year thanks to new tax cuts announced in the Budget. Diesel generation has been handed subsidies to the tune of £175million. 



Falling renewable costs can't be ignored

At the same time, renewable projects are getting off the ground at significantly lower cost than nuclear power. In 2014, a negotiated deal saw £92.50/MWh agreed as a guaranteed price for power generated at Hinkley C nuclear power station. Then there's the cost of dealing with nuclear waste, which works out at an average of £86 per household per year for cleaning up the last generation of nuclear plants. 

Meanwhile, a competitive auction in 2015 to set the price for wind and solar power schemes saw them come in at £80/MWh. Hyman explained:

“The cost of renewables has fallen still further since then. Most of the claims made by those that blame green energy for hiking energy bills tout the line that renewables are the most expensive form of energy. This is completely out of date – they're now cheapest. Good Energy recently announced plans to build a wind farm with no subsidy at all. It's becoming economically unviable to keep propping up nuclear and fossil fuels.”

People power can turn the tide

So how can those in the green industry wrestle back the narrative, and the initiative? 

Hyman said: “First of all, we've got to accept that a transition in our energy system is a big change that affects people. Changes of this magnitude don't happen without public good will. Support for renewables is very high but we are letting the 1% that are strongly opposed drive policy. We need to embrace a new approach to developing renewable energy that enables local communities to have a share and say in this vital infrastructure." 

A greener, more nimble future

Unsurprisingly, Hyman sees a decentralised energy future, with lots of renewables, making best use of the British weather. He also foresees big roles for interconnections both within the UK and with other countries, energy storage, and much greater demand flexibility. He said: 

The National Infrastructure Commission's recent report shows that it shares this view. We will eventually see the end of big centralised power stations. It's the way to go in terms of cost, carbon and energy security.” 

The economic opportunity 

Regen SW analysis showed that £3billion is already invested in renewable energy in the South West alone, with 10,000 employed in the sector. These figures could rise to £10billion and 34,000 by 2020, clearly spelling out the economic possibilities green energy investment can offer both locally and nationally.

Returning to the issue of Port Talbot, Hyman says the story highlights opportunities missed. 

“The UK was one of Europe's early leaders in wind turbine manufacturing, but over the years this was squandered and countries like Denmark took a lead. It is the world’s largest market for offshore wind. Wind turbines are largely made out of steel. With the right industrial policies UK offshore wind farms could have been a major market for British steel. Far from a cost, green energy is a huge potential industrial opportunity – if only we have the foresight to take advantage."


What are your thoughts on this? Post a comment below or tweet us at @energysvgtrust. Alternatively, find out more about renewables for your home.


Gary Hartley is Energy Saving Trust's expert blogger. He has extensive experience researching and writing on a number of topics, with particular expertise in sustainable energy, policy, literature and sport. As well as providing regular blog content, Gary has also been published in numerous magazines and journals.

Post a comment

Does the offshore wind industry publish any estimates of the consumption of diesel fuel in support of operating offshore wind farms?

Thanks for your enquiry, David. At the Energy Saving Trust we help people save energy every day. We suggest that you direct your question to the Renewable Energy Association who should be best placed to assist with the enquiry about off-shore wind power.

EST Team