British Gas Boss Says Renewables Will Not Bring Electricity Prices Down

The UK government claims its goal to decarbonize the whole economy will lower the cost of electricity and lower bills.

Chris O'Shea, group chief executive of Centrica, speaks to the media at the Scottish Gas Academy in Hamilton, Lanarkshire, Scotland, on July 7, 2023. Andrew Milligan/PA Wire

Britain’s shift to renewables will not reduce electricity prices, the boss of British Gas has said.

Chris O’Shea, the chief executive of British Gas’s parent company, Centrica, wrote on the social media network LinkedIn on May 12 that the shift to renewable power “will not materially reduce UK electricity prices from current levels.”

Centrica has one of Europe’s largest renewable energy portfolios and hopes to invest up to 4 billion pounds ($5.3 billion) by the end of 2028.

O’Shea argued the strike price under a contract for difference, the guaranteed payment the government makes to a renewable generator, when inflation-adjusted, shows that 2012 prices for the cheapest renewables like solar, onshore wind, and fixed offshore wind now simply cost the same as today’s wholesale power, rather than undercutting it.

Furthermore, floating offshore wind and tidal stream remain significantly more expensive.

“They may give price stability, and avoid future price spikes based on the international gas market, but they will definitely not reduce the price,” said O’Shea.

He said that “the next time you hear someone say the build out of renewables will reduce UK electricity prices, ask them to explain how.”

“Because we need to get the facts out there so we can make the right decisions-we need to stop having a polarised debate populated with unsubstantiated, but convenient, sound bites,” he said.

He said that he fully supports “the move to a cleaner energy system.”

In 2019, the UK passed laws requiring the UK to bring all greenhouse gas emissions to net zero by 2050.

The UK is known for being a global leader in renewable energy, especially in terms of offshore wind energy.

It has more capacity installed than any other country, accounting for roughly 20 percent of global offshore wind capacity, according to UK Research and Innovation, a national funding agency investing in science and research.

However, the UK also has some of the highest electricity prices in the world.

According to the British government, electricity prices in the UK have gradually become higher than those of most other EU countries. In the early 2000s, its domestic electricity prices were the second lowest in the EU, which was then the EU-15.

Leaders have said that the huge spending needed to shift away from fossil fuels will reduce energy bills.

Labour UK Secretary of State for Energy and Climate Change Ed Miliband, who is pursuing a goal to decarbonize the whole economy via his Clean Power 2030 Action Plan, has promised to shave 300 pounds ($400) off the average household electricity bill by 2030.

He claims that energy bills are rising due to spikes “in global gas markets.”

National Energy System Operator NESO said the Clean Power 2030 Plan would cost 40 billion pounds ($53 billion) or more annually by the end of 2030.

Critics of British net-zero policy have argued that renewables have added to the cost of bills.

The think tank Net Zero Watch, which scrutinises climate and decarbonisation policies, recently disputed claims that high electricity prices are due to the influence of gas prices on wholesale markets.

It claimed that the gas price is now having “only a marginal effect on household electricity bills compared to the situation ten years ago.”

It said that around “three quarters of the increase in bills since 2015 can be attributed to Net Zero” and that a 327-pound ($435) real-terms increase is driven primarily by renewables subsidies (83 pounds), carbon taxes (39 pounds), grid balancing (26 pounds), Capacity Market costs (26 pounds), and grid strengthening (23 pounds).

A Department for Energy Security and Net Zero spokesman told The Epoch Times: “We are making the UK a clean energy superpower to get off the rollercoaster of fossil fuel markets controlled by dictators and replace that with clean homegrown power we control. That is how we can protect family finances and our national finances.

“As shown by the National Energy System Operator’s independent report, clean power by 2030 is achievable and will deliver a more secure energy system, which could see a lower cost of electricity and lower bills.”