Ed Miliband hailed a recent report from the National Energy System Operator (NESO) as vindicating his plan to decarbonise the grid by 2030.
But new analysis shows that the NESO report is built around a series of assumptions designed to cast Miliband’s plans in the best possible light, rather than reflecting the reality of the energy markets.
As other critics have pointed out, the NESO report says that ‘several elements’ of Miliband’s plan are ‘at the limit of what is feasible’. For example, it envisages building twice as much transmission network capacity in the next five years as was built in total over the last decade, with zero delays.
Far more alarming, however, is that the NESO justifies Miliband’s plans by forecasting high gas and carbon prices – substantially higher than market projections, or even the numbers produced by his own department.
The figures for gas prices, for example, have been produced by treating the highest estimates of various independent consultancies as the central price scenario. The result is a price range of between 72p/therm and 290p, with a central estimate of 101p.
But the energy department itself forecasts a range of 42p to 114p, with a central estimate of 72p. Meanwhile, the International Energy Agency is predicting an ‘LNG glut’ which sends gas prices in Europe to a third or half of today’s levels by 2030.
Likewise, NESO assumes a carbon price that is 2.7x higher than today’s figure, including an extra £25 tariff to deter power stations from sending non-green energy overseas.
Using the central price forecasts produced by Miliband’s own department, his plans would make UK electricity more rather than less expensive. The counterfactual scenario modelled as an alternative is a strawman, where we make pitiful progress this decade. And the numbers only add up if ‘clean power’ is defined as a grid that is 95% decarbonised, rather than 100% – a definition the Government has yet to confirm it will adopt.
When making hugely important decisions about the future of Britain’s energy system, politicians need to be guided by the best available evidence, rather than picking the evidence to fit their existing ideological beliefs, and warns that the Energy Secretary appears to be failing this test.
