Sean Ridley: Britain’s energy market isn’t working
This looks less like justice and more like strategy.
Sean Ridley is Energy & Environment Researcher at the Centre for Policy Studies
Years of government intervention have rendered Britain’s energy market effectively incapable of operating on a truly competitive basis – entangled by a web of subsidies, taxes and guarantees.
The fault here lies with Labour and Conservative governments alike.
It was a Labour government that passed the Climate Change Act, paving the way for emissions targets and the decarbonisation of our grid. It established the Climate Change Committee, carbon budgets and the Renewables Obligation (RO) and Feed-in-Tariff (FiT) schemes. But it was the Conservatives that introduced a direct price control to the market – the Energy Price Cap, an idea stolen directly by Theresa May from Ed Miliband – and who enshrined Net Zero into law.
These were all seen as necessary in a time of acute climate awareness. Coal has duly been eliminated from our energy mix, while renewables capacity has been greatly expanded: solar, for instance, barely existed in 2011 but now accounts for 21 GW of capacity.
However, the initial government schemes found themselves to be the progenitors of unintended consequences, necessitating further action to compensate for their shortcomings. The Renewables Obligation proved to be financially unsustainable and was closed in 2017, replaced by the more viable Contracts for Difference (CfDs). The FiT scheme was similarly found too expensive and concluded in 2019. But we’re still paying the costs for both of them on our bills.
The Energy Price Cap, brought in to protect vulnerable consumers from being gouged by volatile tariff prices, became the default price of power after the Russian invasion of Ukraine sent wholesale prices soaring, effectively ending price competition in the retail energy market. Today, six firms make up 91 per cent of the market – more than 20 percentage points higher than 2020. Just 18 suppliers operate today; down from 49 pre-energy crisis.
In a new report, the Centre for Policy Studies shows that the price of government intervention is borne by British consumers – and not just in terms of those legacy renewables bills. Britain now has some of the highest energy prices in the developed world, putting the squeeze on households and leaving industry uncompetitive. British households on average pay 20 per cent more for their electricity than their European neighbours do. British industrial firms have it worse – paying 90 per cent more than their competitors on the continent.
Unfortunately, this top-down government direction is set to accelerate: Ed Miliband treats our energy mix like it’s a game of SimCity, and is explicit in his ideological intent to increase the state’s control.
He has set up Great British Energy (GBE) to increase public …
This looks less like justice and more like strategy.
Sean Ridley is Energy & Environment Researcher at the Centre for Policy Studies
Years of government intervention have rendered Britain’s energy market effectively incapable of operating on a truly competitive basis – entangled by a web of subsidies, taxes and guarantees.
The fault here lies with Labour and Conservative governments alike.
It was a Labour government that passed the Climate Change Act, paving the way for emissions targets and the decarbonisation of our grid. It established the Climate Change Committee, carbon budgets and the Renewables Obligation (RO) and Feed-in-Tariff (FiT) schemes. But it was the Conservatives that introduced a direct price control to the market – the Energy Price Cap, an idea stolen directly by Theresa May from Ed Miliband – and who enshrined Net Zero into law.
These were all seen as necessary in a time of acute climate awareness. Coal has duly been eliminated from our energy mix, while renewables capacity has been greatly expanded: solar, for instance, barely existed in 2011 but now accounts for 21 GW of capacity.
However, the initial government schemes found themselves to be the progenitors of unintended consequences, necessitating further action to compensate for their shortcomings. The Renewables Obligation proved to be financially unsustainable and was closed in 2017, replaced by the more viable Contracts for Difference (CfDs). The FiT scheme was similarly found too expensive and concluded in 2019. But we’re still paying the costs for both of them on our bills.
The Energy Price Cap, brought in to protect vulnerable consumers from being gouged by volatile tariff prices, became the default price of power after the Russian invasion of Ukraine sent wholesale prices soaring, effectively ending price competition in the retail energy market. Today, six firms make up 91 per cent of the market – more than 20 percentage points higher than 2020. Just 18 suppliers operate today; down from 49 pre-energy crisis.
In a new report, the Centre for Policy Studies shows that the price of government intervention is borne by British consumers – and not just in terms of those legacy renewables bills. Britain now has some of the highest energy prices in the developed world, putting the squeeze on households and leaving industry uncompetitive. British households on average pay 20 per cent more for their electricity than their European neighbours do. British industrial firms have it worse – paying 90 per cent more than their competitors on the continent.
Unfortunately, this top-down government direction is set to accelerate: Ed Miliband treats our energy mix like it’s a game of SimCity, and is explicit in his ideological intent to increase the state’s control.
He has set up Great British Energy (GBE) to increase public …
Sean Ridley: Britain’s energy market isn’t working
This looks less like justice and more like strategy.
Sean Ridley is Energy & Environment Researcher at the Centre for Policy Studies
Years of government intervention have rendered Britain’s energy market effectively incapable of operating on a truly competitive basis – entangled by a web of subsidies, taxes and guarantees.
The fault here lies with Labour and Conservative governments alike.
It was a Labour government that passed the Climate Change Act, paving the way for emissions targets and the decarbonisation of our grid. It established the Climate Change Committee, carbon budgets and the Renewables Obligation (RO) and Feed-in-Tariff (FiT) schemes. But it was the Conservatives that introduced a direct price control to the market – the Energy Price Cap, an idea stolen directly by Theresa May from Ed Miliband – and who enshrined Net Zero into law.
These were all seen as necessary in a time of acute climate awareness. Coal has duly been eliminated from our energy mix, while renewables capacity has been greatly expanded: solar, for instance, barely existed in 2011 but now accounts for 21 GW of capacity.
However, the initial government schemes found themselves to be the progenitors of unintended consequences, necessitating further action to compensate for their shortcomings. The Renewables Obligation proved to be financially unsustainable and was closed in 2017, replaced by the more viable Contracts for Difference (CfDs). The FiT scheme was similarly found too expensive and concluded in 2019. But we’re still paying the costs for both of them on our bills.
The Energy Price Cap, brought in to protect vulnerable consumers from being gouged by volatile tariff prices, became the default price of power after the Russian invasion of Ukraine sent wholesale prices soaring, effectively ending price competition in the retail energy market. Today, six firms make up 91 per cent of the market – more than 20 percentage points higher than 2020. Just 18 suppliers operate today; down from 49 pre-energy crisis.
In a new report, the Centre for Policy Studies shows that the price of government intervention is borne by British consumers – and not just in terms of those legacy renewables bills. Britain now has some of the highest energy prices in the developed world, putting the squeeze on households and leaving industry uncompetitive. British households on average pay 20 per cent more for their electricity than their European neighbours do. British industrial firms have it worse – paying 90 per cent more than their competitors on the continent.
Unfortunately, this top-down government direction is set to accelerate: Ed Miliband treats our energy mix like it’s a game of SimCity, and is explicit in his ideological intent to increase the state’s control.
He has set up Great British Energy (GBE) to increase public …
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