Do Renewables Make Your Bill Higher?

Authored by: Trevor Hutchings, CEO of the Renewable Energy Association

No.

While the UK has some of the highest electricity prices in Europe, and we must do everything we can to bring them down, this is not because of renewables.

The UK is upgrading its critical energy infrastructure and, like most countries around the world, is replacing aging power stations with renewables and other clean technologies. This investment is partly funded through consumer bills because of the way successive governments have chosen to attribute costs onto bills rather than through general taxation.

So, there are additional energy infrastructure costs on bills and some of these are for investment in renewables and associated infrastructure – but here’s the thing…

Much of these investment costs would be there in any case as aging assets come to the end of life or need upgrading to meet increasing demand as our economy grows and as we turn to electricity to power more of our daily lives.  Our aging nuclear power station fleet for example, is coming to the end of its operational lifespan and we have needed to replace polluting coal fired power stations with cleaner forms of generation.

Renewables are cheaper than building new fossil fuel plants and have already helped reduce bills over what they would otherwise have been, and will further bring down the underlying cost of energy over time.  Indeed, the costs of building and operating a new gas fired power station today are 3.5 times higher than when the last one was built around 5 years ago, with a comparable offshore wind farm being 40% cheaper.  As such it’s important we press on with the roll out of renewables to ensure the full benefits flow through to bills as soon as possible.

Critically, home grown renewable energy decouples the UK from the grip of international fossil fuel price volatility which we saw most recently with the war in Ukraine when UK bills skyrocketed and the government had to subsidise households to the tune of £44bn.  Indeed, we were again reminded of our exposure to gas price shocks when they spiked 30% recently because of President Trump’s Greenland intervention.  Gas prices remain higher than before the war in Ukraine and Great Britain is more highly dependent on gas when compared with other European countries. A further characteristic of the GB market is that gas sets the price we pay for our electricity for the majority of each 24hr period of the day, more than nearly all other European countries.  This is more reason to reduce our dependency on gas by switching to renewables.  Exploiting more North Sea gas wouldn’t help as we would remain a net importer of gas and, in any event, gas prices are set by international markets regardless of whether it’s produced at home or not.

So, no, renewables do not make bills higher, they will lower the underlying cost of energy over time, strengthen energy security, cut climate changing emissions and bring jobs and growth opportunities. Over half of the UK’s electricity already comes from renewables, Europe has recently achieved a similar milestone,  and globally twice as much investment is flowing into renewables as fossil fuels. The tide has turned and it’s essential the UK continues to lead the clean energy transition.