UK energy bills at risk of increasing due to green subsidies

UK energy bills at risk of increasing due to green subsidies

The over deployment of renewable energy initiatives, such as solar panels and wind farms, could increase energy bills from now to 2020.

The Levy Control Framework was introduced in 2011 to put a cap on total costs for renewable energy policies each year until 2020-21. However, the National Audit Office (NAO) has reported that the spending for 2020-21 is currently set to exceed its cap by £2 billion due to the over deployment of green energy initiatives.

The NAO and Energy and Climate Change Select Committee have both previously urged the government to regularly report the impact of any consumer-funded scheme on energy bills but they have failed to do so since 2014. This lack of reporting to parliament has meant that costs of various schemes, such as the installation of green energy, have not been closely monitored and so UK energy bills could rise as a result.

In 2016, consumer-funded schemes have made up £132 of the average UK household energy bill (£1,029) and this is predicted to rise to £164 by 2020, according to a report released by the NAO. This is particularly concerning for low-income households and businesses that use a large amount of energy.

With this being said, the average UK household energy bill is expected to decrease to £991. This is due to low wholesale energy prices and an expected reduction in household energy consumption as a result of existing energy efficiency policies. However, there is always the possibility of wholesale energy prices increasing. If this occurred the presence of energy efficiency policies alone may not be sufficient to combat the effect that the cost of framework schemes has on bills.

It is key, therefore, that the public maximise their contribution to energy reduction by closely following all existing energy efficiency policies, thereby providing the best possible chance of preventing household bills from rising.

To stop this growing issue of overspending, the NAO has suggested that the government creates a much clearer approach to the implementation and ongoing monitoring of its renewable energy schemes, amongst others.