British Gas Electricity Price Rise – Green Policy to Blame or Is It?

British Gas has announced today that they will increase electricity prices by 12.5% from 15 September. British gas owners Centrica said the rise was a result of transmission and distribution costs and the costs of government policy. Energy price rises are a perennial argument that will never go away. Whilst wholesale prices have not been blamed this time, it is worth noting that fossil fuels are a finite resource that are difficult to get out of the ground as quickly as we use them, this will inevitably lead to unstable prices in the future. See the 2016 BP Statistical Review for the data. Total world oil production consistently lags behind consumption. Total world gas production in some years is more than consumption in and some years less, this is what is primarily used in the UK to generate electricity. Total world coal production has been keeping up with consumption over recent years as the use of it declines.  Whilst we are so dependent on oil and gas (and available reserves decline) it is inevitable that the price of them will increase.

Compare fossil fuels to wind, solar, tidal and hydropower. These sources of energy are effectively infinite and clean. At the moment they do not have the economies of scale and the tax incentives to compete on the same scale with fossil fuels but as time goes on they are becoming more and more competitively priced. With investment into reducing demand, managing demand, local generation and distribution our future really can lie with renewables.

There is no getting around the fact that renewable targets, smart meter rollout and subsidies for insulation are a factor driving the cost of electricity bills higher. The costs of these are passed on to the bill payer via their electricity bill. So should we ditch the environmental policies to make our bills cheaper? Well it’s not quite that simple. There are very good reasons why these policies are in place and a little of the cost borne by everyone (12% 0f your bill).

Subsidies for insulation are specifically aimed at households with elderly occupants. By having increased insulation their energy bills are reduced and importantly the demand for gas and electricity nationally is reduced too, being greener and saving the precious resource for other important things that will be difficult to replace.

Renewable targets are driven by the need for cleaner air and reduced greenhouse gas emissions. Improved air quality is a cost saving to the NHS and to families who have healthier members who can work longer and more productively. With investment in energy storage, a sustainable supply of energy in the future using renewables becomes a reality.

Smart meter rollout is an essential part of the government strategy to manage energy demand and reduce usage. This will be part of a smart energy network that will ensure that we can charge electric vehicles and turn off refrigerators and other electrical appliances according to the demand on the electricity network.

In the meantime what can you do to cope with the rising cost of electricity? The cheapest electricity is the electricity you don’t use. The savings you can make by having more efficient appliances and simply switching things off are not insignificant. If you run a business and would like help on energy management or other environmental issues please feel free to call us on 01746 552423 or email info@crediblygreen.com.

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