Billpayers “deserve transparency” about the cost of renewable energy projects, says IEA energy analyst
7 July 2022
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Matthew Lesh quoted in The Telegraph
11 July 2022
Lifestyle Economics
15 November 2024
Commenting on the announcement of a new renewable energy pipeline, Andy Mayer, energy analyst at free market think tank the Institute of Economic Affairs, said:
“A pipeline of up to 11GW of new renewable energy capacity, nearly all of which are pitched well below current power market prices is welcome. This is what a low-carbon transition looks like, and the CFD-auction scheme is helping limit costs and waste.
“However, if market prices remain high, it is unlikely that these bids, most made before the latest energy crisis, will be honoured. Poor contract design means some projects from previous rounds are gaming the system to secure windfall gains, at billpayers expense, by delaying take-up.
“The faster delivery times for these new projects, set out at just 2-4 years, are encouraging, but will not impact bills today, and will slide if rising prices continue to impact renewable supply chains.
“Neither the cost of new grid connections, nor back-up power (usually gas or coal) required to cope when the sun isn’t shining, and wind isn’t blowing, are included. The public deserve full transparency on these costs rather than misleading hype about ‘cheap renewables’.
“The small tidal stream projects bid at 4-5 times the cost of offshore wind bids look like wasteful vanity projects. The government should not be forcing billpayers to subsidise the commercial risk of demonstration projects by ‘picking winners’, thereby limiting the benefits of auctions.”
“A pipeline of up to 11GW of new renewable energy capacity, nearly all of which are pitched well below current power market prices is welcome. This is what a low-carbon transition looks like, and the CFD-auction scheme is helping limit costs and waste.
“However, if market prices remain high, it is unlikely that these bids, most made before the latest energy crisis, will be honoured. Poor contract design means some projects from previous rounds are gaming the system to secure windfall gains, at billpayers expense, by delaying take-up.
“The faster delivery times for these new projects, set out at just 2-4 years, are encouraging, but will not impact bills today, and will slide if rising prices continue to impact renewable supply chains.
“Neither the cost of new grid connections, nor back-up power (usually gas or coal) required to cope when the sun isn’t shining, and wind isn’t blowing, are included. The public deserve full transparency on these costs rather than misleading hype about ‘cheap renewables’.
“The small tidal stream projects bid at 4-5 times the cost of offshore wind bids look like wasteful vanity projects. The government should not be forcing billpayers to subsidise the commercial risk of demonstration projects by ‘picking winners’, thereby limiting the benefits of auctions.”
ENDS
Notes to editors
Contact: media@iea.org.uk / 07763 365 520
IEA spokespeople are available for interview and further comment.
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