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The policies behind your energy bills

15 November 2011

It may be a week old, but last Monday’s episode of Panorama really is worth putting
half-an-hour aside for, if you haven’t seen it already. Its subject was energy prices, and it raised some very urgent concerns about the government’s policies in that area. You can watch it
on the BBC site, but here’s a brief summary in the meantime.

All in all, switching our dependence away from coal and oil is going to be enormously expensive. Some £200 billion of taxpayers’ money is to be spent on increasing renewable energy
output from seven to thirty percent by 2020. And, because sources like offshore wind costs almost £100 an hour more than traditional generators, this policy’s most immediate effect will
be to raise energy bills sky high. The repercussions of Britain’s growing dependence on wind power, in particular, will be wide reaching. It will cost £17 billion alone to adapt
Britain’s electricity network to wind energy, and new power stations will have to be built along coastlines to accommodate offshore wind, along with another 214 miles of new pylons to carry
electricity inland through areas of outstanding natural beauty.

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Panorama blames much of this on Tony Blair’s ‘multi-billion pound gaffe’ at the EU energy summit in Brussels, 2007. According to them, Blair was advised before the summit that
Britain could not manage more than 15 percent of renewable electricity by 2020. Instead, he pledged to apply this percentage to all British energy by the same date — a decision that has since
been called either an ecological masterstroke or a ludicrously naïve and expensive blunder. Citigroup estimates that putting our money where Blair’s mouth was is costing the taxpayer
about £25 billion a year — the equivalent of ‘two-and-a-half Olympic games a year, or two-and-a-half times the budget of NASA’.

‘One challenge,’ Chris Huhne tells the programme, ‘is to get us into a position where we’re less vulnerable to the sort of big price increases for oil and gas that
we’ve see over the last year.’ Fair enough. But fossil fuel prices might easily fall, and a new report by the accountancy firm KPMG claims it would be possible for the UK to achieve its
carbon target by moving from coal to gas, and developing wind energy more slowly. This would apparently save the taxpayer £34 billion.

Over six million British households spend upwards of 10 per cent of their income on energy. The government forecasts that, in the long term, this statistic will fall. As Huhne hedgingly puts it:
‘at any given point the total effect of government policies, including the energy saving reduction, is going to be to make sure bills are lower than they would otherwise be.’ But
investigations by Citigroup and predict that that our average gas and electricity bill could double, or even triple by 2020. Little wonder why David Cameron is worried.

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Show comments
  • William Blakes Ghost

    The most abysmal policy of this shoddy mongrel of a tin-pot junta. Looney Huhne is to the Coalition what Gordon Brown was to Labour and both parties will fall on the back of their corrupt and absurd energy policies.

  • DN

    It’s obvious. We’re sitting on 300 years of coal reserves. Open up the pits. mine the coal. Burn it. don’t believe the lies about Global warming. Coal Mines don’t just provide coal. They provide work in trades such as Electricians, Fitters,Engineering,HGV drivers, geologists. The communities would come alive . There would be high employment. You could really say to the workshy “Go work at the local pit or get no benefits.When the pits were thriving there wern’t any scivers in the communities because they stayed away from the area because there was always work at the Pit…………….
    Coal not Dole.

  • Jon Stack

    Here’s one of Huhne’s “energy saving reductions”: Rio Tinto Alcan today announced the closure of its Lynemouth aluminium smelting plant, with the loss of at least 515 jobs. It’s chief exec said “….it is clear the smelter is no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation…”. A reference no doubt to this government’s carbon floor price and the burden of renewable energy subsidies and other environmental taxation. It’s no coincidence that forward electricity wholesale prices rose sharply when the floor price was announced. We’re all paying for it, but especially the Lynemouth 500 and their families who pay for it with their livelihoods.

  • Hexhamgeezer

    RE JB 1153

    …..and Peak Freans was 1989

  • Hexhamgeezer

    The political elites wanted PFI so they fiddled the figures so their media toadies had some smoke to conceal the reality of the inflated costs.

    Same with wind.

  • Barbara

    As for the question of why Blair should knowingly want to hobble the UK, I would imagine that – on past performance – it would be because there was something in it for him, somewhere along the line. He was prepared to sacrifice us into the euro in order to be EU President, remember.

  • daniel maris

    Oldtimer –

    I think Germany has the storage problem licked. It is developing solar and wind generation of methane (using water and air for manufacture). Methane (the same as natural gas) is perfect for us and the Germans because (a) we have an established storage and distribution network and (b) we use it to heat our homes a lot (and the stored methane will often be required the most when it is the coldest).

    The cost of storage is not as great as seems because it means more wind energy can be sold at peak times.

  • daniel maris

    Alexandsr –

    Tidal energy certainly produces the cheapest electricity in Europe (at La Rance – about 4 cents per KwH I believe).

  • daniel maris

    TGF – You can argue about those levelised costs forever. They don’t include the cost of national security related to counter-terrorism measures for nuclear as far as I know. And they don’t include the health costs of coal either.

    But wind energy beat even natural gas in a recent open tender exercise in Brazil.

  • daniel maris

    Sir Everard Digby,

    You are confusing hot fusion with cold fusion.

    Cold fusion is a very cheap technology. More aking to a coal fired boiler than anything else. Relatively low tech in fact. The amount of fuel used is tiny. From everything I have read about it, I wouldn’t be surprised if it can produce electricity at about 1/3 the price of gas.

    Google on Rossi and Focardi and you will find out more about the technology.

    PFM has also noted we are not talking about hot fusion here and that apart from a brief mention in the Daily Mail science section, there has been little interest in this in our media.

  • alexsandr


    But windmills are the wrong way. We should be looking at harnessing tidal streams like the scheme at Strangford Lough
    And harnessing all the old mill races to make hydro. Remember water is more dense than air so easier to harness.
    But changing building regs and planning rules to make new development include their own energy capture is surely a no brainer.

  • Jenny Barnes

    Peak coal in the uk was about 1913. Peak oil US was about 1975 – I seem to remember some interesting effects on oil price before they remembered that they had some more oil under all that Arab sand. Peak oil (world) was about 2005. Peak gas will be around 2035, and peak coal(world) around 2050. Fossil fuels are not going to last forever.
    Energy demand doubles every 35 years. That kind of growth can not be met for long from a finite supply. We’ve had 3 or 4 hundred years of fossil fuel powered growth, and now we need to switch to renewables. Preferably before the fossil fuel runs out or gets unpredictably spiky and expensive. There’s enough energy from the sun for everything we need to do – question is the best way to catch it and turn it into energy we can use. Yes, it’s more expensive than coal.. and there are some vested interests that want to keep earning rent from fossil fuel.

  • Olaf

    Yes energy bills will come down if we install efficient boilers, better insulation, new windows, solar panels, ground sourced heat pumps and get a nice small green car. Except that we’re spending so much on energy that we can’t afford any of that.


    Folks should also be aware of the pernicious use by DECC and the “green” lobby of “levelised costings” to obscure the real cost of renewables such as wind.

    This method of costing excludes the “capacity payments” that will be paid to generators to keep available conventional power plants for use in the type of anti-cyclonic weather in the coldest parts of Winter when the wind don’t blow. Similarly, the grid upgrades that are required to connect remote and distant generating locations are similarly excluded to warp the actual cost of wind generation.

    The sheer mendacity and dishonesty being employed in what is in essence a political project is almost beyond the criminal.

  • alexsandr

    Why is there no discussion on energy conservation rather than trying to meet current levels of use.

    I know people who leave lights on all day, have their houses impossibly warm, and my workplace has all the lights on even when the sun shines. And its too warm.
    And why dont all new office buildings not have solar panels for stuff like water heating as a planning requirement?
    Still lots to do on energy conservation.

  • Matt

    Seldom mentioned by enthusists of wind power is the transmission loss from remote rural or offshore windfarms to the consumer,the majority of whom live in lowland Britain. I have heard that 10% loss may be conservative, making wind energy even more foolish

  • oldtimer

    The trouble with “dependence on wind” is that you cannot depend on it. It is an unreliable as well as an expensive source of energy. It requires backup capacity on permanent and expensive standby. A modern economy cannot and will not run on windpower, let alone compete in a wider world that relies on lower cost energy sources.

    The global warming scam, and the so-called measures to deal with it, must be one of the biggest and most scandalous frauds ever to have been inflicted on a gullible public. It will all end in tears…and worse.

  • Peter From Maidstone

    Sir Everard, the processes which Daniel is describing are not true fusion and therefore do not cause any of the problems you identify. It does seem that the media has chosen not to report these developments for some reason.

  • Sir Everard Digby

    Daniel Maris.

    Cold fusion is a problematical solution for this particular issue. Why?

    1.A fusion reaction is so massive that we have trouble containing it and the heat produced safely.

    2.The energy required to produce a fusion reaction is so massive that the net energy yield we can expect to get from fusion is meagre.

    The Sun is an example of how fusion works:think of it this way, it loses 40millionKG (i think) every second and is set to die in about 6 billion years

    3. The power plants would cost trillions to build.

    4. The reactor walls would havee to be replaced every 10 years.

    Such power plants would be dangerous -the forces they would havee to contain are far beyond what nuclear fission produces. Any component failure would cause a very large explosion.

    Fusion will not be cheap – They tell you it runs on water – what they don’t tell you is that the materials to build the magnetic containment and the ruby and diamond lasers and all of this other stuff is going to cost a pretty penny. Rich nations may be able to afford this luxury, most nations on earth will not.

    It is many many decades away and will not remove our reliance on other sources of energy.

  • alan scott

    The quality (lack of) of contributions is dropping fast. I have stopped reading them, and prefer to spend the time considering the original article.
    If I wish to read half-digested, kneejerk reactions, I can go the another sort of journal/newspaper. These at least are sometimes humorous, even if unintentionally.

  • daniel maris

    Whoops – sorry. That was meant for the Liddle blog.

  • Dimoto

    “Little wonder why David Cameron is worried”.

    Hmmmm, heartening in a way I suppose (Osborne winning the argument ?)

    But perhaps Cameron should stop listening to know-nothing arses like Goldsmith and Huhne,

  • daniel maris

    The case for green energy does not rest on climate change. It can be made on the basis of:

    – Energy independence.
    – A clean and healthy environment.
    – Stimulation of domestic employment.

  • daniel maris

    If you lived in the Faeroe Islands where everyone knows everyone else, would you say Jorgen for the murder of his wife because everyone knew he was a vicious wife-beater?

    It’s not vindictive and it’s not a charade. It’s a search for justice being held in the open.

    Why focus on this theme?


    JohnPage, yup and did you notice he’s got more than a touch of the Blinkies – he blinks as he lies and lies as he blinks.

    Imagine the fun it would be to have him and Balls on together – would the cameras be able to keep up with all that blinking lying.

  • Heartless P.

    The energy ‘debate’ – for what little it’s worth, – is riven with lies, hypocrisy, vested interest, – all underpinned by green bullsh*t, EUSSR bullsh*t, and some weird agenda of the H2B.

    The only result is that idiots like us tolerate this drivel and pay through the nose for it. That’s the ultimate tragedy!

    The proponents of this nonsense should all be strung up with their own organic rope.

  • Paul Maynard

    what most of the commenters have missed is that the entire renewables fraud is based upon the lie of man made climate change. There is no evidence to support this “theory” but it is backed by the same crooks who thoughtbthe euro was a good idea.

    The wonder is that so many apparently intelligent people have swallowed this tripe. That Huhne is in government is a testament to our stupidity.

  • daniel maris

    TGF is right about the huge cost overruns on “new nuclear”. To get involved in that is to suffer the triple whammy of expensive energy, a potential environmental disaster and a financial commitment that continues for tens of thousands of year, long after the energy production stops (the need to store the waste).

  • daniel maris

    Trevors Den –

    Mere semantics…The point is that Rossi (along with many other researchers) have managed to obtain excess energy through these sorts of processes. Rossi’s technology and others seems to involve the use of hydrogen and nickel. Energy is released (in the form of protons I think, but don’t quote me on that). Some gamma ray radiation is released, but only small amounts which can easily be contained within a lead chamber. Some people now call the process “a low energy nuclear reaction” – LENR. But the general public understand better the idea of “cold fusion”. If it is misnamed thus, it wouldn’t be the first technology to be misnamed.

  • JohnPage

    I could have sworn Panorama had mentioned (though not made much of) shale. Huhne emerged as the brazen liar we know him to be.

  • M. Rowley

    The Panorama programme was certainly a useful contribution to the debate, but in truth said nothing new to add to what Christopher Booker has been saying for years about the folly of pursuing wind power to the detriment of all other options.

  • TomTom

    The North of England should secede and take the big power stations and coalfields with them. With abundant water, electricity and the main gas pipelines from the North Sea they can let the South meet all these Climate Change parameters the Lords of Misrule decided on in Whitehall.

    Better still Scotland and Northern England could go their own way and burn coal because it is COLDER there than where Greenies vote to punish people for driving to work and burning fuel to stay warm and keep lights burning on dark days like the present.

  • TrevorsDen

    Cameron clique? I think we inherited 13 years of Labour energy anti nuclear policy don’t you?

    Rossi-Focardi cold fusion? Its not nuclear – its chemical (involving undisclosed ‘additives’) and so its not fusion and not cold.

    These people have not so much cooked a bowl of pasta with this thing yet. Given all the global warming rubbish – science is becoming a 3 ring circus.

  • Dennis Churchill

    May I suggest a revolutionary strategy when someone makes a massive mistake that will harm the country for decades?—Put it right.
    Scrap the agreement on the grounds it was signed by a fool who was out of his depths and should have stuck to defending petty criminals somewhere.
    Treaties are bits of paper and like bad laws should be changed or repealed when they no longer suit the circumstances.

  • daniel maris

    We should be putting a lot more effort into developing low wind energy (having missed out on developing large wind turbines). There are already cost effective low wind turbines. In the UK we have plenty of industrial sites where they would actually enhance the built environment.

  • TrevorsDen

    ‘Or the third possibility – it was a deliberate and malicious attempt to shut Britain down.’

    Why would that be a possibility? why would the British govt – even Blair’s want that?

    Seems to me that the current govt should revoke what Blair said and go back to 15% of electricity.

    However since abandoning coal and gas and nuclear is BBC policy (see what I did there?) – I wonder why they are complaining.


    "Some £200 billion of taxpayers money is to be spent on increasing renewable energy output" Wrong, wrong, wrong – it is not "taxpayers money" but electricity bill payers’ money that will be spent. Millions of people do not pay income tax but do have to pay their electricity bill. This is Heath2’s electricity bill poll tax.
    Nor is this poll tax money to be spent simply on wind etc. One very large chunk of it will go in "capacity payments" the level of which have yet to be fixed but are payments to generators to have available, but not to operate, conventionally generated power when the wind does actually blow. Predictably, the "capacity payment" concept is apparently the brainchild of Loopy himself – nuff said!
    The other very large reason for the £200bn, apart from supporting the likes of Sir Reginald and his daughter, is to provide a massive bung to the French state nuclear industry. A couple of years ago, the talk was of new nuclear coming on stream by 2018 with the cost of a major nuclear station being c£5bn. Forget it! The plants currently being built by Areva in Finland and in Normandy are 3/4 years behind schedule with the Normandy site set to cost double the originally estimated cost. Forget £5bn therefore and think of something closer to double that to get anywhere near.
    Already Osborne’s Carbon Floor Price tax is set to give  a multi three figure millions handout to EDF who were the principal lobbyists for the tax and I again raise the question – just what is the driving force behind the Cameron Clique’s massive bungs to the French using our money.
    "Follow the money" said Deep Throat and there’s massive crookey here somewhere with The Clique at its centre.

  • Jon Stack

    Huhne’s “energy saving” reduction won’t come from the source he’s hoping it will come from. It will actually come from the reduction in demand caused by manufacturing industry closing or moving production abroad due to ridiculously high energy prices here and unpredictable power cuts affecting the uk as the grid struggles to provide sufficient capacity margins.

  • James Sproule

    If you use a subsidy to encourage renewable, that subsidy becomes part of the cash flow, which determines the capital value of the project. Thus removing the subsidy will collapse capital values and discourage investment, so subsidies are continued long past the date of their questionable value.

  • daniel maris

    Well so far since the coalition came in I’ve predicted flat lining growth, the need to revise the NHS proposals, the departure of Liam Fox and a few other things as well – in other words I’ve been a lot more accurate than the Speccie writers.

    So I’ll risk another prediction:

    I think the Rossi-Focardi cold fusion device, now in production, will supplant both renewable and fossil fuel energy over the next couple of decades and make this whole debate somewhat redundant.

    It’s amazing there is no discussion of this device in the MSM. You journos are seriously failing in your duty to inform the public.

    As for the cost of renewables, I would make the following points:

    1. Feed in tarrifs are an appalling way of bringing in the change. We should opt instead for a housing levy (on house sales) that would pay for development of the green energy infrastructure. Putting that infrastructure in place should be seen as akin to developing our motorway system. The operating costs of green energy are actually very low.

    2. Offshore wind is not onshore wind. Onshore wind is competitive with coal and that is where most development should be now.

    3. You don’t give the cost of sticking with coal or developing nuclear…New nuclear is certainly incredibly expensive – will probably cost more than wind.

    4. The bankers were rescued with a £70billion package. Now that’s wasting money…£70billion for sinking ships. With the green energy investment you have a real benefit.

  • Paul Danon

    If wind, wave, hydro, solar and tide are so good (after all they’re free), they can pay for themselves and even subsidise a nuclear building-programme.

  • Barbara

    ‘An ecological masterstroke … or a naive and expensive blunder ..’

    Or the third possibility – it was a deliberate and malicious attempt to shut Britain down.

  • whatawaste

    Oh, and the other masterstroke was to locate many of the wind farms in the windless and foggy North Sea. And instead of buying British (a firm on the isle of Wight has since relocated to the USA) we buy Swedish.

    The ex isle of Wight company makes wind turbines designed for very strong winds such as in the Midwest (tornado country). Another classic dumb and dumber decision by our poltical elite….

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