Miliband’s Lower Bills Lie Continues To Unravel

By Paul Homewood

 

 

https://www.neso.energy/publications/clean-power-2030

When NESO published its Clean Power 2030 Plan last November, Ed Miliband immediately claimed it vindicated his Net Zero policies. He told the BBC:

“The national energy system operator said that not only was clean power achievable, but it will lead to lower costs of electricity and indeed it can leads to lower bills”

As we know, the report made clear that we could not operate without a full fleet of gas power stations. But Miliband’s claims of lower bills were immediately undone, when it was discovered that NESO’s calculations actually showed costs would go up substantially. It was only by assuming massively higher carbon taxes that NESO were able to claim that renewables would be cheaper.

And as I reported a day or two ago, NESO’s small print admitted that they had made no allowance at all for the cost of transmission grid upgrades, specifically required for Clean Power 2030 and reckoned to be in the region of £100 billion.

But it’s even worse than that. But let’s backtrack first.

Miliband’s claims of lower bills were based on this section of the NESO report:

https://www.neso.energy/publications/clean-power-2030

As you can see, he was being economical with the truth, because it was only wholesale costs which would supposedly fall. This would be more than offset by other costs.

This in turn was based on this table from Annex 4 – I have blown up the two important sections:

The costs of wind and solar are derived from AR6 CfD. For CCGT, the light grey band is “Emission Cost”, ie Carbon Pricing.

The fuel costs, in dark grey, are misleadingly labelled as Max and Min, suggesting they are DESNZ high and low projections. They are not, however. What they misleadingly describe as “Today’s Price” is in fact at the high end of DESNZ projections, and “in line with [much higher] 2023 gas prices:

Their estimate of 100 p/therm equates to CCGT generation costs of £64/MWh, at 53% efficiency. Currently gas prices are running at around 80 to 90p/therm.

What they call the “Reduced Gas Price” scenario in the first table is also nothing of the sort. It is actually the DESNZ Central projection:

In other words, the central projection gives CCGT costs of between £42 and £58/MWh:

Latest DESNZ projections give a central price of 70p/therm in 2030. That works out at a fuel cost of £45/MWh for CCGT, compared to £83/MWh for offshore wind.

https://www.gov.uk/government/publications/fossil-fuel-price-assumptions-2024

So going back to this original table, cost of generation won’t go down by £15/MWh. Replacing the 100 TWh of gas power currently generated with offshore wind will add an extra £4 billion to bills.