Consumers could end up paying £2.6 billion extra per year in energy bills unless the government steps up the pace of renewable energy deployment, according to a new analysis conducted following Monday’s Contracts for Difference (CfD) auction.
The report from the Green Alliance think tank found that the roll out of renewable energy can be accelerated following the auction, which showed that the guaranteed price required by offshore wind farms had halved since 2015.
In Monday’s second auction round, three new projects – Triton Knoll, Hornsea Project 2 and Moray – were priced at just £58/MWh from 2022-23.
According to the report, there are around 65 TwH of renewable energy projects capable of delivering power cheaper than gas fired plants.
The savings delivered by an increase in cheap wind and solar plant capacity, coupled with energy efficiency measures, could save consumers £2.5bn per annum by 2025, more than doubling to £5.3bn by 2030.
This increase in renewable energy capacity would also reduce the requirement for new nuclear power, according to the Green Alliance.
The think tank’s analysis shows that the UK could meet its greenhouse gas emissions targets, which are enshrined in the fifth carbon budget, with the addition of only two new large nuclear power stations, including the already approved plant at Hinkley Point C.
It added that, by the end of the next decade, nuclear energy subsidies will be five times as high as those for renewable energy.
To compete with offshore wind after 2025, the costs of new nuclear plants would have to fall by at least 30% to less than £65/MWh. The strike price agreed between government and Hinkley Point developer EDF is £92.50/MWh.
Chaitanya Kumar, senior policy adviser at Green Alliance, said: “Since 2015, the UK has been cutting back on renewables just as they’ve become cheap, having previously invested heavily to bring down their costs.
“A smarter strategy would be to follow through on the earlier investment and buy more of this cheaper, clean energy, which would keep energy bills down and support new jobs in the renewables industry across the country.”