Free market doesn't work again.

[Park Life 71]

Energy bills will be unaffordable without system overhaul, says regulator

• Bills could rise by up to 25% by 2020 to fund investment

• Nationalisation may be required to ensure supply

 

 

The cost of heating homes could rise to unaffordable levels, with gas and electricity bills reaching nearly £2,000 a year, unless drastic action is taken to shore up supply and overhaul the system, says Ofgem. Photograph: David Sillitoe

 

Energy regulator Ofgem today warned Britons may not be able to afford to heat their homes in the years ahead unless there is radical overhaul of the country's energy supplies.

 

The regulator warned the country's current system may not be sufficient to ensure "secure and sustainable" power across the country beyond 2015.

 

In announcing proposals for a radical range of options (pdf), including setting up central buying of power, Ofgem's chief executive, Alistair Buchanan, admitted that maintaining the current free-market approach was no longer an option.

 

Energy bills could rise between 14% and 25% by 2020 as the industry pays for the £200bn cost of investment needed to overhaul of the current system. He warned that increasing number of consumers would be unable to afford the cost of heating their homes.

 

The proposals could force the government to undo the privatisation of the energy markets led by Margaret Thatcher and could force a form of nationalisation again if it decides to implement central buying of power.

 

The regulator had previously warned that average household gas and electricity bills could reach nearly £2,000 a year without drastic action to shore up supply.

 

Buchanan said: "Our evidence shows that Britain has a window of opportunity to put in place far-reaching reforms to meet the potential security of supply challenges we may face beyond the middle of this decade. We do not advocate change lightly, but all the facts point to the need for reforms now to provide resilient supply security. Acting earlier will also help keep costs as low as possible for consumers and business."

 

The regulator has had more than 50 responses to a consultation it began in October and the most radical proposals in todays' "Project Discovery" conclusions is the need for a central buyer of energy.

 

"The overwhelming majority of responses to Ofgem's October consultation show that there is an increasing consensus that leaving the present system of market arrangements and other incentives unchanged is not an option. Ofgem has therefore put forward a range of possible options to unlock the up to £200bn of investment Britain may need. We are keen to work with government to find the best way forward," Buchanan said.

 

The regulator said reform was needed because of a confluence of events ranging from the global financial crisis, significant worldwide demand for investment in energy, tough EU emissions targets, the closure of ageing power stations and an increasing dependency on gas imports. "The outcome of Copenhagen, in terms of lower carbon prices, reinforces the climate of significant uncertainty just when an unprecedented level of investment is required," Ofgem said.

 

John Cridland, deputy director-general of the employers' body the CBI., said: "This report serves as a stark warning that existing policy will not deliver the balanced energy mix needed to provide security for the UK, help cut carbon emissions, and maintain competitive prices."

 

Ofgem said its analysis was consistent with the recent Energy Markets Outlook report, published jointly by the Department of Energy and Climate Change and Ofgem, that "our scenarios show supply to be relatively secure until around 2015".

 

The regulator set out five key issues:

 

• A need for unprecedented levels of investment over many years in difficult financial conditions and against a background of increased risk and uncertainty.

 

• The uncertainty in future carbon prices is likely to delay or deter investment in low carbon technology and lead to greater decarbonisation costs in the future.

 

• Short-term price signals at times of system stress do not fully reflect the value that customers place on supply security which may mean that the incentives to make additional peak energy supplies available and to invest in peaking capacity are not strong enough.

 

• Interdependence with international markets exposes Britain to a range of additional risks that may undermine the country's security of supply.

 

• The higher cost of gas and electricity may mean that increasing numbers of consumers are not able to afford adequate levels of energy to meet their requirements and that the competitiveness of industry and business is affected.

[trophyshy 7098]

1 February 2010 - Press Release - Cash Rewards for Low Carbon Electricity and Heating

 

* Feed-in tariff for small scale low carbon electricity finalised for 1 April introduction

* Power from solar panel could earn £900, on top of £140 reduction on household energy bill

* Blueprint published for world first incentive scheme for renewable heat

* Tariff levels index linked

* Micro combined heat and power piloted in the scheme to kickstart the industry in the UK

 

 

 

Households and communities who install generating technologies such as small wind turbines and solar panels will from April be entitled to claim payments for the low carbon electricity they produce.

 

Energy and Climate Change Secretary Ed Miliband today announced the feed-in tariff (FITs) levels and also published a blueprint for a similar scheme to be introduced in April 2011 to incentivise low carbon heating technologies. The renewable heat incentive (RHI) will be a world first.

 

The schemes are designed to bring about a significant increase in the amount of locally produced green energy, as a contribution to the wider shift of the energy mix to low carbon.

 

Ed Miliband said:

 

“The guarantee of getting an income on top of saving on energy bills will be an incentive to householders and communities wanting to make the move to low carbon living.

 

“The feed-in tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past.

 

“It will also change the outlook for a range of industries, in particular those in the business of producing and installing small scale low carbon technology.”

 

From 1 April householders and communities who install low carbon electricity technology such as solar photovoltaic (pv) panels and wind turbines up to 5 megawatts will be paid for the electricity they generate, even if they use it themselves. The level of payment depends on the technology and is linked to inflation.

 

They will get a further payment for any electricity they feed into the grid. These payments will be in addition to benefiting from reduced bills as they reduce the need to buy electricity. The scheme will also apply to installations commissioned since July 2009 when the policy was announced.

 

A typical 2.5kW well sited solar pv installation could offer a homeowner a reward of up to £900 and save them £140 a year on their electricity bill.

 

Mr Miliband was speaking as he visited low income homes in Dagenham being helped by eaga’s Clean Energy for Social Housing project to make the move to microgeneration. The scheme offers free clean energy technology to tenants in social housing which will lower their electricity bills and carbon emissions.

 

John Swinney, eaga Director of Strategy and Corporate Services, said:

 

“By utilising the feed-in tariff initiative and installing free solar technology this programme can cut energy bills for those most in need. We are also recruiting and training renewable energy engineers directly from the local communities where the green technology is being installed.

 

“This innovative development can be offered right across the UK. We expect thousands of households to benefit in the first few years and up to 300 additional green energy jobs could be created as part of this programme.”

 

The Department of Energy and Climate Change also published today plans for a scheme to incentivise renewable heat generation at all scales. This will come into effect in April 2011 and guarantee payments for those who install technologies such as ground source heat pumps, biomass boilers and air source heat pumps.

 

Under the proposed tariffs the installation of a ground source heat pump in an average semi-detached house with adequate insulation levels could be rewarded with £1,000 a year and lead to savings of £200 per year if used instead of heating oil.

 

The heat incentive could help thousands of consumers who are off the gas network lower their fuel bills and gain a cash reward for greening their heating supply.

 

Details of funding for the scheme will be published in the Budget 2010.

 

http://www.decc.gov.uk/en/content/cms/news...0/pn10_010.aspx

[Rob W 0]

Hardly replaces Drax Power Station tho will it?

[NJS 4446]

I still think cheap, efficient solar panels are the future - though I wouldn't be surprised if there was a conspiracy theory type cover-up like the electric car that's stopped us having them already.

 

I also have hopes for fusion

[Park Life 71]

I'd vote for Parky if he ran for PM

 

surely better than Cameron

 

[Meenzer 15871]

I still think cheap, efficient solar panels are the future - though I wouldn't be surprised if there was a conspiracy theory type cover-up like the electric car that's stopped us having them already.

 

I'd venture that installing solar panels across the entire country and importing all our meat, fruit and veg would work out more cost-efficient than using the same land for agricultural purposes. Bit less pretty on the eye, admittedly.

 

Of course, the present and next government would prefer us to accept the prospect of inhabiting high-rise matchboxes with a supposed market value of £150k+ and precisely no quality of life, which makes the issue of personal responsibility for efficient roof space usage somewhat less important, but there you go.

[AgentAxeman 199]

I still think cheap, efficient solar panels are the future - though I wouldn't be surprised if there was a conspiracy theory type cover-up like the electric car that's stopped us having them already.

 

I'd venture that installing solar panels across the entire country and importing all our meat, fruit and veg would work out more cost-efficient than using the same land for agricultural purposes. Bit less pretty on the eye, admittedly.

 

Of course, the present and next government would prefer us to accept the prospect of inhabiting high-rise matchboxes with a supposed market value of £150k+ and precisely no quality of life, which makes the issue of personal responsibility for efficient roof space usage somewhat less important, but there you go.

 

 

these solar panel thingy's. if they are so good, why dont we just stick billions of them in the sahara desert (or any other desert for that matter)? admittedly the initial cost would be massive but i would imagine it'll pay for itself in a couple of years. obviously less energy production costs but also less money to spend on mending the sky etc....

[Park Life 71]

I still think cheap, efficient solar panels are the future - though I wouldn't be surprised if there was a conspiracy theory type cover-up like the electric car that's stopped us having them already.

 

I'd venture that installing solar panels across the entire country and importing all our meat, fruit and veg would work out more cost-efficient than using the same land for agricultural purposes. Bit less pretty on the eye, admittedly.

 

Of course, the present and next government would prefer us to accept the prospect of inhabiting high-rise matchboxes with a supposed market value of £150k+ and precisely no quality of life, which makes the issue of personal responsibility for efficient roof space usage somewhat less important, but there you go.

 

 

these solar panel thingy's. if they are so good, why dont we just stick billions of them in the sahara desert (or any other desert for that matter)? admittedly the initial cost would be massive but i would imagine it'll pay for itself in a couple of years. obviously less energy production costs but also less money to spend on mending the sky etc....

 

It's expensive and logistically prohibitive to move electricity over great distances. For instance the solar leccy produced in California will stay in California etc..

[Rob W 0]

Far better under "parky's Great Leap Forward" to put a small A-reactor under the stairs in every house I think..........................