Dec. 14 (Bloomberg) — The U.K. government’s effort to
expand renewable energy generation will boost household
electricity bills by 54 percent by 2020, according to a study by
Bloomberg New Energy Finance.
The green energy program will account for about 40 percent
of the increase with 28 percent more due to gains in wholesale
power prices as the country shifts away from aging coal-fired
generation, the London-based researcher said today. Grid
upgrades account for most of the rest of the increase.
Prime Minister David Cameron’s government has trimmed
subsidies for solar and wind power after a surge in
installations. He’s concerned utilities such as SSE Plc and
Centrica Plc have lifted energy costs for consumers, threatening
to curtail a sluggish economic recovery.
“The U.K. is transforming its mix of generation, pushing
renewables close to 30 percent by 2020, largely at the expense
of coal, and with a greater dependence on rising gas prices,”
Michael Lawn, head of power research at BNEF, said in the
statement. “The only way households and businesses can mitigate
the impact of higher electricity bills will be by improving
energy efficiency.”
The average electric bill will top 699 pounds ($1,125) a
year in 2020 compared with 454 pounds now, BNEF said in the
statement. Electricity bills have risen more than 70 percent
since 2005, mostly because of increases in the cost of natural
gas and coal.
The government on Nov. 29 published plans to overhaul the
power market as it aims for 15 percent of its energy to come
from renewable sources by 2020. Its changes would spur
investment in low-carbon power plants. It will support the
building of gas-fired stations and the exploration of shale gas
resources. Shale gas is unlikely to drive a large fall in gas
prices in the U.K. to 2020, BNEF said.
Low-carbon policies currently account for less than 10
percent of a typical household electricity bill. By 2020 this
will be 21 percent, said Fraser Johnston, a power analyst at
BNEF.
To contact the reporter on this story:
Louise Downing in London at
ldowning4@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
