For energy consumers of all varieties, the million dollar question is “will my bill keep rising?”, as it has done for the past five years.
Optimists will point out that global oil, coal and gas supplies look more than adequate to meet demand in the immediate future, and possibly well beyond, which should keep wholesale prices low. UK electricity demand has yet to recover to pre-recession levels and in the industrial sector may never do so because of demand destruction such as closure of aluminium smelters, energy efficiency and growth in distributed generation.
So the supply-demand balance this winter may not be as tight as previously feared, especially with the additional reserve supply and demand response measures introduced by National Grid.
On the other hand, climate policy measures are set to get much more expensive over the medium term so electricity prices will rise further, unless the government takes action.
This might have implications for renewables investors, but so what? It is not renewable deployment but decarbonisation that matters – and the UK economy has recently been decarbonising ahead of expectations.
A bit more competition for subsidies between novel low-carbon technologies, and a bit less money thrown at mature technologies such as onshore wind, might be a very good thing. Every other industry has to stand on its own feet, without subsidy – mature renewable technologies will need to do so too, if they are to have a sustainable future.
Jeremy Nicholson, director, Energy Intensive Users Group