Independent review on cost of energy published

Wednesday, 25 October 2017 19:49

An independent review into reducing costs in each element of the electricity supply chain has been published today. Building on the government’s Industrial Strategy Green Paper, Professor Helm CBE was asked in August to consider the whole electricity supply chain of generation, transmission, distribution and supply. The review follows the plan...Request free trial

An independent review into reducing costs in each element of the electricity supply chain has been published today.

Building on the government’s Industrial Strategy Green Paper, Professor Helm CBE was asked in August to consider the whole electricity supply chain of generation, transmission, distribution and supply.

The review follows the plan set out in July by government and Ofgem to upgrade our network to a smarter energy system, and the publication of draft legislation on an energy price cap to keep families’ energy bills as low as possible.

The government remains committed to the ambitious agenda of cutting carbon emissions while driving economic growth, as set out in the Clean Growth Strategy, as well as other recent announcements, including;

providing up to £557 million for further Contract for Difference auctions for less established renewable technologies, with the next one planned for spring 2019;
putting an end to households being charged unjustifiably high prices for their energy – Parliament will continue to scrutinise the draft legislation designed to place a temporary cap on energy prices and
continuing delivery of reliable and secure electricity supplies through the capacity market.

We will shortly be seeking the views of industry, businesses, academics and consumer groups on Professor Helm’s review.

Business and Energy Secretary Greg Clark said:

Homes and business depend upon reliable, affordable power and the government is ambitious in its plans to keep costs as low as possible for them over the coming decades.

We are already taking significant steps to upgrade our energy infrastructure as part of the Industrial Strategy and have published draft legislation to cap poor value energy tariffs helping millions of consumers across Britain.

I am grateful to Professor Helm for his forensic examination. We will now carefully consider his findings.

Which? response to Professor Helm's study into the falling cost of energy

Alex Neill, Which? Managing Director of Home Products and Services, said:

"It is clear that competition isn't working well in the energy market and this report only serves to confirm to people struggling with their bills that they aren't paying a fair price.

"As the Government sets about introducing an energy price cap, it must learn the lessons of this and countless other reviews and make sure that further interventions in the energy market do not result in higher bills, a failure to improve service or a halt to much need innovation.”

Energy UK response to publication of Helm report

Following the publication of an independent review into the cost of energy led by Professor Dieter Helm, Energy UK chief executive Lawrence Slade commented:

“We fully share Professor Helm’s goal of ensuring that the transition to a low carbon energy system comes at the lowest cost to customers. And we are committed to working together with the Government to look at the best ways of ensuring that the billions of investment needed can be delivered competitively via a range of technologies. In line with our stated position, we’d agree that with the right framework is put in place, the industry can get on and deliver.

“The industry has made great strides forward, with half of our generation now coming from low carbon sources and, as shown by the recent Contracts for Difference auction results, the cost of renewables is falling significantly. However when costs outside of suppliers’ control are levied onto customer bills we should be clear about these as well as working hard to minimise them.

"We will now look in detail at Professor Helm’s report and will respond to his recommendations.”

REA comment

Today Professor Dieter Helm has released the Cost of Energy Review which was commissioned by Government earlier this year. The Review argues that there is a simpler and more affordable means of decarbonising the energy system , including through amalgamated auctions and a higher carbon price. The REA agrees that large-scale thinking is needed in this time of transformation but argues that the report has fallen short of fully recognising the opportunities that are emerging from a more decentralised, renewables-oriented energy system.

Commenting on the review, James Court, Head of Policy and External Affairs at the Renewable Energy Association said:

“There is broad thinking in this report that the renewables industry can get behind, especially that we need to decarbonise in the lowest cost way, and that uncertainty and continual government interventions can add to overall costs. We are glad the report notes the huge cost reductions renewables have had. We agree it is time for policy reform that gives industry longer term certainty about how the sector will be structured so that companies can make proper investments in manufacturing capacity.

“The energy market is changing rapidly, and the future energy market can be lower cost, lower carbon and centred around the consumer. This report hints at the evolution of the industry, but perhaps doesn’t fully recognise the fundamental shift that is happening from centralised and inflexible generation to a smarter, more connected and decentralised energy system, and the policy framework needed to make that happen.”