11 min
Don't bank on energy prices falling any time soon Helm Talks - energy climate infrastructure & more
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- Business
The reasons why energy prices have shot up are well known: the Russians and extra demand in the Far East when it comes to gas, exacerbated in the UK by the lack of storage, the scale of the intermittent renewables, and the fast-track exit from coal. The UK government assumes that this is all very temporary, that gas prices will fall back by the autumn, and that the temporary storm can be weathered by, in particular, a £200 loan to customers, which will be easier to repay as the energy bills fall back again.
Don't bank on it: the energy bills are not just the consequence of rising gas prices, and higher gas prices may not be all that temporary. But, even if they are, there are other reasons why energy bills may keep going up. There are the legacy costs of past renewables subsidies, there are more subsidies to come, there are the system costs of integrating a huge further increase in offshore wind, and then there are nuclear and other low-carbon technologies to come. Dealing with climate change is a must, and it is not going to be cheap. Better to tell the truth, so that we all know what is in store in this radical transition, than delude people that the £200 is going to be easy to pay back. Get ready for permanently higher costs to come.
The reasons why energy prices have shot up are well known: the Russians and extra demand in the Far East when it comes to gas, exacerbated in the UK by the lack of storage, the scale of the intermittent renewables, and the fast-track exit from coal. The UK government assumes that this is all very temporary, that gas prices will fall back by the autumn, and that the temporary storm can be weathered by, in particular, a £200 loan to customers, which will be easier to repay as the energy bills fall back again.
Don't bank on it: the energy bills are not just the consequence of rising gas prices, and higher gas prices may not be all that temporary. But, even if they are, there are other reasons why energy bills may keep going up. There are the legacy costs of past renewables subsidies, there are more subsidies to come, there are the system costs of integrating a huge further increase in offshore wind, and then there are nuclear and other low-carbon technologies to come. Dealing with climate change is a must, and it is not going to be cheap. Better to tell the truth, so that we all know what is in store in this radical transition, than delude people that the £200 is going to be easy to pay back. Get ready for permanently higher costs to come.
11 min