Debt-Funded GB Energy to Bet on the Costliest Electricity Generation Technologies

Written by David Turver on July 29, 2024. Posted in Current News

Labour has taken to the airwaves to promote the launch of the Great British Energy Bill in Parliament.

The official press release makes a number of bold statements that do not have a very close relationship to the truth.

First, they make several claims about “cheap” renewables such as the claim that the Energy Secretary has “unblocked the production of cheap solar energy”. The Prime Minister claimed the new bill would “bring down energy bills for good” and the investment will be “lowering bills for families and businesses.”

Perhaps as a portent for what is to come, Labour appears to have dropped the pre-election pledge to cut energy bills by £300 (see Figure 2).

The pledge has been reduced to a conditional “should make bills lower in the long term”. This is not surprising because as discussed here, the promised reduction has already been delivered by reduced gas prices.

This is not a surprise because they are committed to investing in some of the whackiest, most expensive energy technologies. As well as offshore wind they are also going to invest in carbon capture and storage (CCS), hydrogen, wave and tidal energy. As Figure 3 shows, these are all extremely expensive technologies.

For this financial year, the average market reference price for wind and solar, largely set by gas, has been around £65/MWh. In the latest AR6 renewables auction round they are offering fixed offshore wind £102/MWh, floating offshore £246/MWh, tidal stream £364/MWh and wave power £359/MWh.

All the renewable technologies are more expensive than gas (even when loaded with a carbon tax), with some costing many multiples of gas-fired power. Our bills can only go one way, and that is up.

The press release, the Prime Minister and the Energy Secretary all also claim that spending more money on renewables will lead to more energy security.

They fail to explain what will keep the lights on cold, calm winter evenings when the wind is not blowing and the sun is not shining. Of course, the flexible, dispatchable electricity required will be generated by gas-fired power stations and even more gas will be required if these are fitted with CCS.

The press release makes no mention of their commitment to ban further offshore exploration and development of gas resources in the North Sea. Even the Climate Change Committee and the National Grid ESO recognise we will need gas well beyond 2050, so building more intermittent renewables and cutting gas production both actively reduce domestic energy security.

GB Energy will form a partnership with the Crown Estate to try and accelerate offshore wind developments. GB Energy will be funded by £8.3 billion of (borrowed) money from the Government and the Crown Estate will be granted new borrowing powers.

The Crown Estate estimates this mountain of debt will lead to up to 20-30GW of offshore wind capacity being leased by 2030.. They plan to conduct early development work to de-risk projects for the private sector.

They claim this new endeavour will bring “profits back to the British people”. What they really mean is that bill payers will be stung by the cost of the eye-watering subsidies for these new projects.

And the profits that arise in GB Energy and the Crown Estate will flow through into Treasury coffers. Ordinary people will only pay the costs and receive none of the profits.

It is only a matter of time before we are exhorted to Stay Cold, Protect the Grid and Save Gas, perhaps accompanied by Patrick Vallance giving daily tallies of deaths from hypothermia.

See more at Daily Sceptic

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