Well, thanks a lot, Vladimir. The cold weather is here and, with energy bills being used to put the West under pressure for supporting Ukraine, every family and business has to be miles more careful with the heating than normal. Add in the lingering symptoms of the pandemic disrupting global supply chains and fuelling inflation everywhere, and it’s pretty much a perfect storm.
But there are still things we can do to minimise the problems. To start with, the Government is providing a lot of help with subsidies to make everyone’s energy bill a bit more
manageable. But it’s ferociously expensive and, ultimately, switching the pain from our
energy bills to our tax bills is only moving costs from one pocket to another. It’s enormously
valuable and desperately needed immediate help, but it’s still a short-term sticking plaster
rather than a permanent cure.
So what’s the long term answer? The fundamental problem is that, even though we’ve built
loads more cheap, green renewable energy generation in Britain over the last decade or
more, those lower costs aren’t showing up in our energy bills. We’ve got to carry on building
even more renewable energy because it makes us less dependent on European gas prices
and helps us get to our Net Zero targets too. But that won’t be enough on its own. I’ve just
published a series of recommendations in a recent review called “Unfinished Revolution”
and, if we get on with them quickly, they ought to provide the kinds of long-term answers
which will make families warmer, cut businesses’ costs and leave Mr Putin fuming too.
Firstly, to update the system and directly lower energy bills, local residents could be offered
discounted electricity if their community gives democratic consent for building new energy
kit, whether it’s a new wind or solar farm, or a line of pylons, or a big battery facility to store
power for later. They wouldn’t have to agree if they didn’t want to – that’s democracy, after
all – but plenty would conclude that the lower bills were worth it. And everyone would benefit
because the overall costs for the country as a whole would be miles lower too.
Those discounts would help with the second essential reform: unlocking local agreement to
new infrastructure to speed up our incredibly expensive, slow, uncertain and risky planning
system. At the moment it imposes unwanted developments on communities that hate them.
And it takes years too: at the moment new green electricity generators have to wait 10 years
before they can connect to the power grid. The only people who do well out of it are the
enormous and growing armies of lawyers and planning consultants who earn vast fees and a
fat living out of making this lumbering, wheezing, over-complicated machine move ever-so-
slowly forward. The whole thing needs to be much faster, simpler and cheaper, with
democratic community consent outranking legal appeals instead.
Next, the way energy companies are charged for getting power from their generators to
families and companies needs to reward the ones that do it well. That means charging less
for firms that have generators close to their customers, because it minimises transmission
losses in getting electricity to them. And charging less for firms that match their power
generation to their customers’ needs most closely throughout each day, so there’s less strain
and cost for the transmission grid to soak up, and lower costs for everyone overall too.
Finally, we’ve got to fix the price caps and social tariffs too. When prices start falling and the
Government’s schemes aren’t needed anymore, we can’t just go back to the way things
were before. We will still need a ‘relative’ price cap to stop energy firms from reintroducing
loyalty penalties which sneakily penalise loyal customers who don’t switch. And a small, tight
social tariff for the least well-off who are claiming benefits and who will still find energy
expensive even when Vladimir Putin has been put back in his box.
My original Government-commissioned Penrose Report came in the wake of covid and
before the invasion of Ukraine. Global context may have changed since 2020, but the need to
make the UK the most competitive place for investment, support consumers and future-proof
our energy system remains. There isn’t a moment to lose.
Views expressed in this blog are those of the author, not necessarily those of the Conservative Environment Network. If you are a CEN supporter, councillor, or parliamentarian and would like to write for the CEN blog, please email your idea to cameron@cen.uk.com.