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Government Green Energy Estimates Inaccurate Say Aurora

Written by at 17:01

Following Love Energy Savings’ recent analysis of whether or not green energy subsidies are really worth it, research has been published which suggest estimates regarding its viability and implementation in the United Kingdom are way out.

Calculations made by the government regarding how long green energy subsidies are predicted to last have turned out to be inaccurate, according to research by Aurora Energy Research. This means that they will now have to pay far more to energy suppliers looking to provide green solutions due to an agreement that states that these providers are to be given lower subsidies when prices are high and vice versa.

Problems Caused By Capped Subsidies

The government’s decision to cap their funding for subsidies has caused much of the market uncertainty that now exists and may well have acted as a catalyst for the research undertaken. Electricity prices have been lower than expected in recent months and the amount the government has had to pay in green subsidies has increased, leading to the cap.

The Levy Control Framework, which limits the cost of energy initiatives via home and business energy bills, also has a lot to do with the development of the current situation.

Offshore Wind Projects Affected

The report indicates that some pretty significant offshore wind projects will now be adversely affected by the fact that suppliers are no longer sure what subsidies they will get from the government. With the United Kingdom legally bound to produce 15% of its energy from renewable sources in just six years, this issue could pose a serious problem. If many more green shelved then the target could become unrealistic to say the least.

Conflicting Electricity Price Estimates

In their report, Aurora state that the wholesale price of electricity is likely to drop from £51 per megawatt hour last year to £46 per megawatt hour when the above deadline arrives in 2020. In contrast to this, DECC’s estimates suggest that the same prices would sit at around £68.

DECC responded to this by stating that their calculations for gas and electricity prices were based on long term trends and not fluctuations which occur over a shorter period of time.

However, John Feddersen, Chief Executive of Aurora Energy Research countered with the following statement;

“The world has changed substantially since DECC made its forecasts.”

“Gas is a lot cheaper than it was, carbon price support has been frozen and there is more renewables penetration.”

If you want to learn more about green energy or are simply looking for information regarding your domestic or home energy needs, why not get in touch with the team of specialists here at Love Energy Savings? We have a panel of specialists ready and waiting to help you and remember, we will never charge you a single penny for our advice!

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