Is Government meddling pushing back a 'golden age' of cheap and sustainable energy?

31 August 2016, 15:60   By Samantha Smith

ENERGY UK have blamed Government tinkering for holding back a 'golden age' of cheap and sustainable energy.

renewable energy solar and wind
Credit: Mr. Kosal/

Lawrence Slade, the Chief Executive of the group that represents the UK's biggest energy providers, identified 10 recent changes he and Energy UK believe are driving investment away from the energy sector.

Underlining how such changes have caused uncertainty in the market, he called on the Government to settle on a long-term plan that would reassure foreign investors.

Failing that, he warned that foreign money would turn elsewhere, resulting in an absence of funding for alternative energy sources and higher prices for customers.

Still, while it's true that the Government have introduced numerous policy changes over the past year, it's also true that Energy UK represents suppliers who often have a distinct financial interest in opposing governmental regulation.

The only way is down

In naming these 10 destabilising changes, Mr Slade mentioned such embarrassments as the cancellation of a £1 billion competition to design carbon-capture-and-storage (CCS) technology and the continued postponement of the second round of Contracts for Difference (CFD) allocations (CFD being a scheme first introduced in 2014 that offers providers a guaranteed price for the energy they generate).

He claimed that such delays and U-turns make "investors question just how secure their investment is and make them look at other markets."

Partly because of this questioning, the UK's position in the Renewable Energy Country Attractiveness Index dived in May to an all-time low of 13th.

Compiled by consultancy firm Ernst & Young, the disappointing showing of Britain on this report was blamed by the firm on a "non-committal approach" from the Government.

Their Energy Corporate Finance Leader predicted that, if the Government's current half-heartedness continues, then "the only way for the UK is down."

As Energy UK sees it, what this would mean is that foreign investment would dry up and, because providers would be forced to make up any shortfalls in funding for renewables themselves, they'd pass on their expenses to their customers in the form of higher bills.

That is, rather than reinvesting their own profits back into the development of sustainable energy and into the future of their own industry, they'd simply treat such development as another chance to take more money from their clients.

This is at least what Slade hinted at when he told The Independent, "We might throw money at [renewable energy] to make sure we keep things going."

What's ironic about such a statement is that it itself is non-committal and uncertain, showing how the Government's lack of clear direction on energy policy filters down into the lack of clear direction shown by energy providers.

Indeed, when the Conservative Government decided in May 2015 to prematurely cancel subsidies for the construction of onshore wind turbines, it didn't take long for private firms to follow suit with their own projects.

For instance, RWE Innogy relocated nine ongoing wind-farm projects within four months of the cancellation. Rather than pumping more than £250 million into the UK economy and creating thousands of jobs, these projects were simply transferred to Germany and the Netherlands.

Similar projects were also cancelled by EDF and Vattenfall, underlining how Government inconsistency becomes the inconsistency of the whole UK energy industry.

Lobbying and hypocrisy

Saving on your energy bills
How energy efficient is your home?
British Gas thinking long term on energy savings
Switching your power supplier
Create your own energy projection

And yet, aside from the dangers of flip-flopping, it's evident that Energy UK are criticising the Government simply because energy providers don't like some of their policies.

This is evident in how one of the changes denounced by Slade was the Government's plans to close by 2025 all coal stations that haven't installed CSS technologies and thereby stopped emitting carbon into the atmosphere.

Since almost all the existing coal-fired power stations in the UK are run by members of Energy UK, it's therefore no wonder that the latter is taking issue with the Government's energy policies.

Even if the removal of traditional coal stations would make Britain's atmosphere considerably cleaner, and even if it would create pressure to replace the lost electricity by other, greener means, the energy companies are unsurprisingly unwilling to consider such a significant dent in their income and profit.

This is a massive part of the reason why Energy UK criticised the Government for its 'incoherent' policies. They want to put pressure on Whitehall to leave their profits alone.

In fact, this has already been happening to considerable effect. In June of this year, it emerged that concerted lobbying by the energy industry had encouraged the former Energy Minister, Andrea Leadsom, to entertain the idea of loosening the carbon-capturing requirements needed to keep coal-fired plants open beyond 2025.

On the one hand, that the government could potentially backtrack like this reinforces Energy UK's central criticism. However, on the other, it also underscores the hypocrisy of the group and its members.

It suggests they're almost as responsible for the Government's inconsistency as the Government itself, constantly pushing Whitehall to reverse its promises whenever their narrow financial interests take issue with them.

This just goes to show that, far from caring deeply about the fate of renewable energy in the UK, their overriding concern is always the fate of their own balance sheets.

This makes the comments of Lawrence Slade seem somewhat insincere, especially when the providers he represents have enjoyed record profits that could be invested in renewables even without the Government's direct help and without passing on the costs to their customers.

It's the economy, stupid

What's more, industry profits - as well as the bills customers are charged - have climbed exponentially despite the downturn that followed the financial crisis of 2008, while the Government, pursuing a path of austerity, have been forced to cancel numerous projects that'd been launched in a more favourable climate.

For example, the £1 billion competition to design CCS technology was announced in March 2007 by the Labour Government, several months before the credit crunch began.

Similarly, the slashed solar panel subsidies were first introduced in April 2010, just before the more austere Conservative-Liberal Democrat coalition took over from the outgoing Labour Government.

In light of these about-faces brought on by a need - whether real or only perceived - to cut public spending, the Government's changes begin to seem less about 'inconsistency' and more about the nation's current financial situation.

This is why Energy UK and the energy industry should invest their own profits into renewables, rather than waiting for support from a Government whose ideology prevents them from spending on alternative energy sources at a time of economic difficulty.

Unlike this Government and the UK as a whole, they haven't been hit by the recession. It's therefore hard to shake the conviction that they should pick up some of the slack and put some of their surplus into renewable energy. And they should do this without using such investment as an excuse to hit their customers with yet another increase in the cost of bills.

This judgement applies all the more if, as Energy UK claim, such renewables would bring about a 'golden age' of cheap and sustainable energy.

Then again, given how "cheap" such an age would be for their customers, the energy industry might not be too disappointed that the Government's U-turning is still pushing it further beyond the horizon.

How much could you save on your energy bill?

independent comparison

We are independent of all of the products and services we compare.

fair comparison

We order our comparison tables by price or feature and never by referral revenue.

charity donations

We donate at least 5% of our profits to charity, and we aim to be climate positive.