Blog
Murder and sleaze at Good Energy
RSS Feed
By Chris Welby, Good Energy’s Commercial Director
The point of a headline is to grab the reader’s attention, hence the above. Today, the headline in the papers was: “60% rise in energy prices”, based on a report by Ofgem, the energy industry’s regulator. Actually, there is a much more cheerful headline from this report, but perhaps not as eye-catching, which is “Renewables will significantly reduce energy price rises”.
The 60% rise (above inflation, I might add) in energy prices is based roughly on 'business as usual' with a rapid move out of recession. The scenario where we exit rapidly out of recession but invest in renewable shows a much smaller rise of 23%. Okay, still a hefty increase but much more palatable than a jaw-dropping 60%. (For low economic growth, figures are 22% to 14% in favour of renewable.)
The underlying reason is this: we have to build new generation capacity, come what may. Existing traditional power stations are reaching the end of their lives and must close. We therefore have a choice: build renewable or build traditional.
If we build traditional, then we need to pay for carbon-based fuel for our generation, more and more of which will be sourced from other countries, not all of them stable. If we go renewable, then nature provides the fuel for free. It should be noted as well, that these figures assume no shocks to the system like rapid rise in oil prices - as seen last year.
The report also shows the renewable option as the best way of keeping the lights on when demand is high.
Okay, you say, there must be a catch. Well of course, the renewable option requires us to invest more, £200bn, whereas the 'business as usual' option is only £190bn. Hardly a big difference in the grand scheme of things, but if that extra investment means cheaper prices it is certainly worthwhile.
The point of a headline is to grab the reader’s attention, hence the above. Today, the headline in the papers was: “60% rise in energy prices”, based on a report by Ofgem, the energy industry’s regulator. Actually, there is a much more cheerful headline from this report, but perhaps not as eye-catching, which is “Renewables will significantly reduce energy price rises”.
The 60% rise (above inflation, I might add) in energy prices is based roughly on 'business as usual' with a rapid move out of recession. The scenario where we exit rapidly out of recession but invest in renewable shows a much smaller rise of 23%. Okay, still a hefty increase but much more palatable than a jaw-dropping 60%. (For low economic growth, figures are 22% to 14% in favour of renewable.)
The underlying reason is this: we have to build new generation capacity, come what may. Existing traditional power stations are reaching the end of their lives and must close. We therefore have a choice: build renewable or build traditional.
If we build traditional, then we need to pay for carbon-based fuel for our generation, more and more of which will be sourced from other countries, not all of them stable. If we go renewable, then nature provides the fuel for free. It should be noted as well, that these figures assume no shocks to the system like rapid rise in oil prices - as seen last year.
The report also shows the renewable option as the best way of keeping the lights on when demand is high.
Okay, you say, there must be a catch. Well of course, the renewable option requires us to invest more, £200bn, whereas the 'business as usual' option is only £190bn. Hardly a big difference in the grand scheme of things, but if that extra investment means cheaper prices it is certainly worthwhile.
So when someone asks you if you read that report about energy prices, you can say: “Yes, wasn’t it great news?!”
blog comments powered by Disqus