Renewable Energy Association
Press Release
24th October 2012

Renewables support schemes comprise only 2% of energy bill increases over past two years

Ofgem data shows average dual-fuel energy bills have risen by £205 in the past two years (July 2010 to July 2012) [1].

Analysis by REA based on Ofgem/DECC data shows support schemes for renewables over a similar period have contributed around £4 to energy bill price increases [2]. That equates to 2% of total bill increases over the past two years. Or in other words, factors other than renewables subsidies are responsible for 98% of energy bill rises over the past two years. Analyses by both Ofgem and the Committee on Climate Change show that increases in wholesale gas prices have been the primary driver of energy bill increases in recent years [3].

Furthermore, the recently announced new round of price increases of around £80 means that renewables will account for an even smaller proportion of energy bill rises. At the same time, renewables are delivering broader household prosperity through growth, jobs and energy security. Renewables support schemes are expected to comprise £22 of average household bills this year.

REA Chief Executive Gaynor Hartnell said:

“The role of renewables in increasing energy bills is often greatly exaggerated. The figures show it's our reliance on fossil fuels that is costing us dear. Not only is it more affordable than people think to go renewable, but the public understands that our future national security and prosperity depend on it.”

The Commons debate today focusses on reforming the electricity market to improve competition in the electricity sector. However, the REA is keen that the role of renewable energy is better recognised in order to help improve consumer choice and competition. For example, a recent study by uSwitch said that Government could do far more to promote solar power to help households save money [4].

Gaynor Hartnell said:

“Renewables make it possible for people and communities to supply themselves with heat or power. This introduces a whole new level of choice and competition into the energy markets. We'd like to see politicians from all parties fully grasp that potential. Support for renewables can drive a much more diverse and competitive market, not just green energy.”

The REA recently set out its 10 Energy Bill demands in a policy briefing. These include specific measures to make it easier for homes, businesses and communities to invest in generating their own power. The briefing is available on the REA website:

http://www.r-e-a.net/images/upload/news_120_EMR_briefing_autumn_2012.pdf

ENDS

For further information or to request an interview, please contact:

REA Press Office: +44 (0)2079 810 856, or:

Name: Gaynor Hartnell
Title: Chief Executive, REA
Tel: +44 (0)7870 629 575

Notes to Editors

• The Renewable Energy Association represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and renewable gas. It is the largest renewable trade association in the UK, with over 900 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

• Labour will today use an Opposition Day debate in the House of Commons to call for energy market reform. The motion of the debate is as follows:

“That this House notes that annual energy bills have risen by more than £200 since May 2010, with further price rises on the way; calls on the Government to help families and pensioners with their energy bills this winter by requiring energy companies to put all people over the age of 75 on the cheapest tariff; and further calls on the Government to reform the energy market to break the dominance of the Big Six by requiring them to sell power into a pool and allowing new businesses to enter the market, thereby increasing competition and driving down energy bills for all, and to replace Ofgem with a tough new energy regulator with the power to force energy companies to pass on price cuts when wholesale costs fall.”

1. According to Ofgem figures, the typical annual dual fuel bill has risen by over £200 in the last two years, from £1,105 in July 2010 to £1,310 in July 2012. See Ofgem: ‘Electricity and Gas Supply Market Indicators – 01 August 2012’, 8th August 2012. Available at: www.ofgem.gov.uk/Markets/RetMkts/rmr/smr/Pages/indicators.aspx

2. According to a written Parliamentary questions answered by Charles Hendry on 19 June 2012 the estimated average amount added by the RO/FITs directly to a household electricity bill in 2010-11 is “£18 for the RO and 20p for FITs.”

Please note that the RO/FIT 2010/11 period runs from April 2010 to April 2011. It was not possible at this stage to obtain data for exactly the same period as above July 2010-July 2012 to compare directly to renewables support. This is therefore an approximate of increases in renewables support over a similar period.

To read Charles Hendry’s answer in full, visit: http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm120619/text/120619w0002.htm#1206202000086

Ofgem anticipates that the RO/FITs will add £22 to electricity bills this year (2012). This will comprise £21 for the RO and less than £1 for FITs. See ‘Updated household energy bills explained’, 31st May 2012, p. 3. Available at: http://www.ofgem.gov.uk/Media/FactSheets/Documents1/household-bills.pdf

3. Ofgem says:

“Higher gas prices have been the main driver of increasing energy bills over the last eight years.”

‘Why are energy prices rising?’, 14th October 2011, p. 1. Available at: www.ofgem.gov.uk/Media/FactSheets/Documents1/Why%20are%20energy%20prices%20rising_factsheet_108.pdf
The Committee on Climate Change says:

“The average dual-fuel energy bill for a typical household increased from around £605 in 2004 to £1,060 in 2010. Of the total £455 increase (i.e. 75%, compared to general price inflation of 16% over the same period), by far the largest contributor was the increase in the wholesale price of gas, which added around £290 to bills.”

‘Household energy bills – impacts of meeting carbon budgets’, 15th December 2011. Available at: http://downloads.theccc.org.uk.s3.amazonaws.com/Household%20Energy%20Bills/CCC_Energy%20Note%20Bill_bookmarked_1.pdf

4. uSwitch: ‘Solar panels cut energy bills for two thirds of households’, 11th August 2012. Available at: http://www.uswitch.com/gas-electricity/news/2012/08/11/two-thirds-of-households-with-solar-have-cut-energy-bills/