CPS head of economic research Daniel Mahoney writes for CapX on the economic bulletin “Are We Heading for Blackout Britain?“, Thursday 29 September 2016.
To read the full article, visit the CapX website.
Over the past decade, UK energy policy has been catastrophically mismanaged. The Government’s promotion of renewable energy has been pushed through without any reference to, or use of, market mechanisms – and it is consumers that will be paying the price.
In a report published today by the Centre for Policy Studies, we estimate that the direct and indirect cost of the Government’s renewable energy programme will come out at £466 a year per household by 2020/21. And that this does not even account for the extraordinarily generous arrangements for the Hinkley Point nuclear power plant, which consumers will be paying for over the next 35 years.
Yet when it comes to UK energy policy, costs are not the only concern. The last 10 years has seen capacity plummet dramatically – but it has also seen the UK’s energy security come under increasing threat.
The culprit is a series of EU directives which have been forcing many coal-fired power stations to close prematurely. At the same time, inept domestic policy has meant that there are simply not enough new gas-fired stations to make up for the shortfall.
According to the Government’s Gas Generation Strategy in 2012, 8GW of new gas-fired power stations should currently be under construction. In fact, there is just the one, which will generate just 900MW. This failure in policy has left the UK with the narrowest of electricity capacity margins for the winter of 2016/17, with supply set to exceed demand by just 0.1 per cent (before any emergency measures are taken).
To read the full article, visit the CapX website.
Date Added: Friday 30th September 2016
