2013: UK Government’s Electricity Market Reforms condemned by SNP government
Alex Salmond’s government warned that the proposals would undermine Scotland’s renewables sector and supply chain, and threaten the security of supply across the UK, and add further unjustified price increases to consumers bills. It also challenged the last minute amendment to the UK Energy Bill removing the Scottish Government’s existing powers and discretion over support for renewable technologies across Scotland. The letter stated: “the UK Government has produced this amendment with no consultation or explanation. We are deeply concerned about this summary removal of the Scottish Government’s discretion in an area of such vital importance to our people and economy. As a matter of urgency, the UK Government must provide a detailed justification for its action”.
4 November 2013 – Lords axe Holyrood’s power over Scottish renewables
Commenting on the debate in the House of Commons on the Lords’ amendment to the UK Energy bill – and in particular Amendment 54 which removed the Scottish parliament’s powers in respect of renewables obligation in Scotland, the SNP Energy spokesman wrote:
“This is an outrageous example of the unionist parties ganging up to remove powers from the Scottish parliament. Worse still, they did so by introducing last minute amendments in the unelected House of Lords, rather than even having the courage to debate it on the floor of the House of Commons. There was no consultation with the Scottish Government or the Scottish parliament prior to the introduction of this amendment, nor when challenged in the Commons did the minister or his Labour front bench counterpart have any reasonable explanation as to why this happened in such an underhand manner.”
2014 – Why is Hinkley a very bad deal for the consumer?
The world of energy is changing fast. Large centralized power stations (like Hinkley) are not now the future. Wind, wave, solar power, electric cars and cheaper storage batteries are.
Yet energy policy in the UK is firmly stuck in the past, with the UK government’s electricity market reform in England being based on building nuclear power stations financially supported with a guaranteed customer supported extravagantly high price for the supply of electricity over the unit’s lifetime (35-50 years).
The taxpayer supported build cost of Hinkley is projected to be in excess of £25bn.
The full cost of energy provision is to be charged to energy users and is expected to be between £37-55bn, inclusive of as yet uncosted annual increase per household.
This foregoing projections are based on a 35-year index-linked price guarantee (‘strike price’) of £92.50 per MWh, (at 2016).
This is over double that of the UK wholesale electricity market price, which means that the British public funds the difference between the amount EDF will be paid and the market price.
In contrast, renewable energy is on a recurring downward price curve, justifying subsidies as yet unrealized developing the technology to its full potential.
Implicit subsidies specific to the Hinkley project include:
- Loan guarantees – Cost overruns or plant defaults. The government (read energy user) will cover the repayment of the first £10bn to investors.
- There will be two re-negotiations of the strike price, 15 and 25 years after the plant starts to generate. At these two re-openers, the strike price might be increased following raises of operating costs, including increases in fuel costs and maintenance.
- The deal includes protection against curtailment (the plant stops running) in case of “the evolution of power systems”. What this means is that if the British energy mix changes to include more renewables, storage, and demand-side management, the plant will be given preferential grid access or payment for power (at the strike price) that would otherwise have been produced. This curtailment risk cover is also understood to extend to changes in political decision-making or changes in law based on environmental and safety reasons.
- As a large generating unit, having 3.2GW on the Grid potentially going off at short notice requires the rest of the Grid to accommodate it and these costs – £160m a year – are being shared by everyone including renewable generators, not paid for by the Hinkley development.
In addition to all the foregoing, Hinkley will also receive other long-standing protections that are given to all nuclear plants. Limitations on liability in case of an accident up to £1.06bn – after which bill payers foot the bill (of note is the liability costs from Fukushima to date are in excess of £100bn and rising). Planned subsidies in excess of £20bn for radioactive waste management.
Hinkley’s levelled price contract is unprecedented – and will mean someone leaving school in 2021 will still be paying for this contract after they retire. Not only will Hinkley become a huge drain on the public purse, and shifts a huge amount of risk onto the public. All of this adds up to the fact supporting Hinkley is not a cost-effective option for the UK power supply.
What is galling is that the financial level of support for Hinkley is not available to low carbon generators like renewables, who are also subject to competitive bidding processes which lower the price further.
Levelled price comparisons, ($), between 2010 and 2020:
Nuclear: 96 rising to 155. Substantial recurring price increases guaranteed.
Offshore wind: 162 reducing to 115. Recurring reductions guaranteed.
Onshore Wind: 86 reducing to 53. Recurring reductions guaranteed.
Solar: 378 reducing to 68. Recurring reductions guaranteed.
Coal: 111 reducing to 109. Being phased out.
2016 The Tory government ended onshore wind farm subsidies
The ending of subsidies for the development of onshore wind farms from April 2016 pushed up energy bills significantly and was criticized for its stupidity since it adversely impacted on the cheapest form of clean energy.
Seeking to justify the decision, the Tory Government stated that onshore wind farms “often fail to win public support and are unable by themselves to provide the firm capacity that a stable energy system requires”. This despite the government’s own survey, which suggested that 67 % of people support them.
Clean energy produces more power in Scotland than nuclear, coal or gas and is set to increase significantly. The expertise of Scottish industry is being exported to other countries worldwide, and the decision of Japan to embrace renewables over nuclear vastly increases opportunities for outward looking Scottish firms.
Recent innovations have seen the introduction of wave power, and Scotland is in the vanguard in the development of this new technology.
Scotland is getting it right, but Westminster is tardy with the financial support which would allow the extension of the UK national grid to Scotland’s offshore islands, and this lack of grid access and increased capacity is delaying clean energy development and power production, which in turn is preventing the UK from meeting emission targets.
What the experts said
WWF Scotland: “The decision undermined the development of the cheapest form of renewables, and was bad news for Scotland’s clean energy ambitions. Cutting support early for the lowest cost renewable technology was a backward step and contributed to higher charges and climate targets missed.”
Renewable UK: ” The Government pulled the rug from under the feet of investors, just when Britain was increasing clean electricity generation at the lowest possible cost, which is onshore wind. People’s fuel bills increased directly as a result of the Government’s actions. Ministers were hopelessly out of step with the public, as two-thirds of people in the UK consistently support onshore wind.
Greenpeace UK said: “Ministers raised everyone’s energy bills by blocking the cheapest form of clean power, whilst continuing to back the impossibly expensive Hinkley C and going ‘all out’ for unpopular, risky, and unproven fracking. The UK Government is willing to wreck the UK’s power sector to please their most ideological backbenchers.
The Nuclear energy policy of the Westminster government
Development plans are to build at least 8 new nuclear power plants in England, which it is projected will provide around 16 gigawatts of power. The plants are to be built by:
EDF Energy 4 new EPRs (6.4GW) at Hinkley Point in Somerset and Sizewell in Suffolk.
Hitachi 2 or 3 new nuclear reactors at Wylfa on Anglesey and the same at Oldbury in South Gloucestershire.
Nu-Generation 3.6GW of new nuclear capacity at Moorside, near Sellafield.
How Does The Wholesale Electricity Market Work?
The wholesale electricity market involves competing generators offering their electricity output to energy suppliers. Suppliers then re-price the electricity and sell it on to business and households.
Electricity can also be imported through inter-connectors which are currently in place between Britain and France, the Netherlands, and Ireland. National Grid Electricity Transmission (NGET) has overall responsibility for the wholesale electricity system.
The general energy market is pretty volatile and fluctuates based on demand for both business users and domestic.
What are the Wholesale (strike) energy Prices In 2021
The current wholesale electricity price is around £71.00 per megawatt-hour (MWh).
The strike price for on and offshore wind power generation is around £38.00 per MWh and reducing daily.
The guaranteed strike price for nuclear generated (Hinkley) electricity is £92.50 per MWh and will increase further.
Note: The guaranteed strike price for nuclear generated electricity is extortionate, and the excess profits to EDF (and France) are being charged to UK consumers. Wind and other renewables are heavily subsidizing the folly that is nuclear energy.
How does your home compare to others in the UK?
An average UK household uses around 3,731 kWh/year. But there are comparison problems since figures tend to be warped by a few households using large amounts of electricity. It is best therefore to compare your home’s energy use to a home of a similar size and type. Here are the averages by dwelling type in the UK:
What is an average dual fuel bill?
|House type||Monthly bill||Quarterly bill||Annual bill|
|1/2 bedroom house/flat||£66||£199||£795|
|3/4 bedroom house||£97||£291||£1,163|
|5+ bedroom house||£137||£410||£1,639|
Summary: Scotland is able to generate all of its energy needs from renewable sources at a cost of around £38.00 per MWh (and reducing) and producing a sizeable and growing excess of energy for transfer to the UK national grid. But Scots consumers are saddled forever with an extravagant £92.50 per MWh (and increasing) cost of nuclear power generation, the chosen option for England and Wales.