A new report from the right-leaning Prosperity Institute think tank has claimed that net zero policies will add £1,400 a year to household costs by 2030. The report estimates that plans to decarbonise the electricity grid will cost taxpayers £40 billion by the end of the decade.
Soaring subsidy costs
The analysis shows that subsidies for wind, solar and nuclear power are set to rise from £11.8 billion to almost £15 billion by 2030. Meanwhile, the cost of upgrading the grid to accommodate more renewables is estimated at £25 billion.
The report, written by David Turver, describes the Government's spending trajectory on net zero as “unsustainable” and warns it could cause “serious economic damage” to Britain. The think tank has called on Andy Burnham to “reorientate” energy policy towards “affordability and security of supply”.
Renewables blamed for high costs
The report argues that renewables, not gas, are driving up electricity costs. “Despite persistent claims that gas is to blame for high electricity costs, it is renewables that have driven a massive increase in the costs of running the electricity system,” it claims.
“The cost of subsidies and grid integration has risen sixfold since 2010 to almost £20 billion per year. Official forecasts show this problem is going to get significantly worse.”
Breakdown of costs
The projected costs are largely divided between subsidies for electricity generation and the expense of adapting and managing the grid. Electricity subsidies include Renewables Obligation Certificates, Contracts for Difference, Feed-in Tariffs and the Sizewell C levy.
Contrasting estimates
However, the Climate Change Committee, which advises the Government, estimates that reaching net zero will cost approximately £4 billion a year – significantly below the figure presented by the think tank. The committee argues that achieving the 2050 target will ultimately cost less than a single major oil price shock.
