Professor Dieter Helm has hit back at critics of his recently published energy costs review by accusing them of being ‘vested interests’.
Giving evidence at a one-off session of the business, energy and industrial strategy (BEIS) select committee, which was held to discuss the government-commissioned review, its author Professor Helm said that widespread reform was required to effectively tackle bills.
He said: “The beneficiaries of the high cost of energy are lots and lots of vested interests so I’m not surprised that each particular vested interest doesn’t like a particular bit of the report that will attack the economic rents that they get.
“Change is expensive and they want to keep the bits that give them high economic rents but not the bits that attack the benefits they have got. We can’t just tinker.”
Highlighting his proposal to break up the district network operators (DNOs), one of a host of recommendations in the report published last October, Helm said: “If I were working for a DNO, I would be against it.”
He also “completely rejected” the suggestion that his review was insufficiently grounded in empirical evidence about the energy market.
And he defended the review against criticisms that it had given insufficient weight to how energy policy can support innovative renewable technologies, by pointing out that research and development was not covered by the terms of reference he had been set by the BEIS department.
Helm said that he accepted that UK government had helped to develop expertise in offshore wind power. “Offshore wind would not have got where it is without government support.”
But he said that he would have devoted £1bn of the ‘tens of billions’, which had been spent on offshore wind subsidies, to support a carbon capture storage demonstration project on the grounds that the UK had a competitive advantage in developing this technology due to its legacy of empty oil and gas wells in the North Sea.
And he told MPs that licences for distribution and supply should be united to encourage the more widespread adoption of storage and demand-side response.
“The idea of distribution will be one of those 20th century ideas in ten years.”
Earlier, the committee had heard evidence from a range of industry bodies about the review.
Nigel Turvey, Chair of the Energy Networks Association’s open networks project, told the committee that Helm’s proposal to disconnnect district service operator and network functions would impede moves to create a more decentralised and renewable system.
“It will delay the transition that we want to make because it will take a huge amount of resource and time to implement.”
Turvey also defended networks against criticisms that their profits were inflated. He pointed to how networks were upgrading their systems to cope with changes in the way electricity is generated and distributed, which had not been anticipated when the existing regulatory and investment framework had been established.
“It’s strongly incentivising companies to innovate and find lower cost solutions and those benefits are being passed down to customers.”
RenewableUK’s executive director Emma Pinchbeck told the committee the government had failed to foresee the recent dramatic fall in renewables, which she expected to continue.
She said:“An energy system led by renewables is the lowest cost option for the UK. I’d bet my house on renewables. A smart energy system can deliver consumers savings of £8bn a year between now and 2030.