Energy UK challenges Helm over energy cost review

Trade body warns a blanket ban on some renewables will boost consumer bills

Energy UK has challenged Professor Dieter Helm by telling him it will “seriously question” his energy cost review if it does not acknowledge that a continued blanket ban on low-cost renewable generation will boost consumers bills.

The industry body has sent a 10-point plan in a letter to Professor Helm, who has been appointed by the government to carry out the review, setting out its priorities.

This includes developing a delivery plan for post-2020 investment in low carbon electricity which Energy UK says should be based on the UK’s emission reduction targets outlined in the 5^th Carbon Budget, adopted last year.

The letter says that this strategy should recognise “the diverse attitudes that exist to a wide range of different and proven technologies across the UK” and should “ensure that the lowest cost large-scale renewables has a route to market”.

It adds: “We would seriously question the findings of the Cost of Energy Review if it did not acknowledge that exempting the cheapest technologies from participating will increase costs to consumers.”

The Conservative Party general election manifesto maintained the government’s opposition to the construction of onshore wind farms while reducing support for solar projects.

The Energy UK submission also calls for a review of costs associated with decarbonisation, including technologies that are currently subsidised by customers’ bills. It says the government should use public funds to support investment in projects of “strategic interest to the British economy”, which could include large new nuclear power stations.

And the 10-point plan recommends the replacement of the existing ECO energy efficiency regime, which relies on a levy on suppliers, with more targeted incentives.  

It says: “The current energy efficiency policy framework is overly reliant on funding through supplier obligations like the Energy Company Obligation. This has led to an expectation that energy efficiency should be provided free of charge, undermining the value of energy efficiency to the public. Government should help kick-start a sustainable energy efficiency market via targeted incentives to encourage demand, supported by regulation that sets a clear trajectory of Government’s expectations.”

The submission also echoes previous calls by Energy UK for the UK to retain its membership of the EU Emission Trading Scheme.

In addition it says that the annual budgets for the regime that replaces the Levy Control Framework, which sets a cap on the level of subsidies for low carbon generation, should be set out four years before the auctions for different technologies take place in order to provide investors with greater certainty about the direction of government policy.

Energy UK chief executive Lawrence Slade concludes his letter by asking for a meeting with Helm. He writes: “There is a risk of continued uncertainty and potentially detrimental intervention into the energy market, which could result in a negative impact on consumers and investment alike.”