Do We Want Higher or Lower Electricity Bills?

Pic 1 010214

 

 

 

 

Figure 1. Domestic electricity bills with and without
major energy efficiency investment.

 

Source: reference [1].

 

Our bills are too high. Please give us lower ones. So say most electricity consumers.

So, how about a 45% cut? Figure 1 shows what an average household’s electricity bill might be for lights, appliances, etc, with and without major investment by utilities in the more efficient use of electricity.

The electricity bill of such a household is £500/year now in 2010 money values. In future, it would be nearer £600/year with business as usual, modest improvements in energy efficiency and large investments in new, expensive power stations.

But it could probably be cut to some £275 per year with major investment in energy efficiency. The £275/year includes an allowance of £75/year for repaying the utility’s investments in energy-efficient lights and appliances on the electricity bill [1].

In 2013, the Green Alliance quoted much the same for the costs of investing in the more efficient use of electricity. See Figure 2.

 

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Figure 2. Green Alliance cost estimates,
‘megawatts’ versus ‘negawatts’.

 

Source: reference [2].

 

 

 

The costs for electricity supply on the left hand side of Figure 2 are generation only. Electricity has to be delivered to consumers as well as generated, and on the way some of it is lost in transmission and distribution. Costs of delivered electricity from wind, nuclear and coal-fired plant with carbon capture and storage/CCS could be 3-4 pence per kWh higher than in Figure 2. That seems to further strengthen the case for investing in ‘negawatts’ and not ‘megawatts’.

Existing policies are not delivering energy efficiency at the rate needed, whether this consists of the more efficient use of gas, electricity or oil. Andrew Warren, Director of the Association for the Conservation of Energy, notes that energy supply companies have been lobbying the government to say that they object to its attempts to reduce energy consumption! [3]

While this behaviour is disappointing, it is hardly surprising. A business exists to make a profit. As long as energy suppliers remain deregulated at retail level, they profit from each extra kWh sold. If the government wishes to incentivise energy companies to act on CO2 emissions, it needs to start considering a return to retail re-regulation as I outlined in my blog of 5 January 2014.

 

 

Notes:

 

[1] The subject is covered in more detail in the report in LESS IS MORE: Energy Security After Oil, report published by the AECB (February 2012).

[2] http://www.green-alliance.org.uk/uploadedFiles/Publications/reports/Creating%20a%20Market%20for%20Electricity%20Savings.pdf.

[3] http://www.businessgreen.com/bg/opinion/2306797/an-appeal-on-behalf-of-eco.

 

 

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