Former Energy Secretary Ed Davey slammed the Chancellor’s renewable energy cuts as “economic idiocy”.
He accused George Osborne of wanting to dominate the government, claiming “he’s telling not just DECC but other parts of the government what to do”.
Mr Davey told ELN: “I’m afraid George Osborne is very anti-renewables, he doesn’t understand the economics of electricity and energy more broadly and he’s doing great damage.”
Mr Davey added: “They think, I believe, we can do all by gas. So by reducing the investment in renewable electricity and as nuclear goes to rite because it’s getting delayed, they think ‘don’t worry we can expand gas, it’s okay’.”
He believes gas is going to be “more and more expensive”.
Mr Davey said: “For future gas stations we build, which is clearly the way the Chancellor wants to go, they’re going to have to pay even more in capacity market payments.
“So you add those to the wholesale electricity price and then you think about what might be a price for carbon and their strategy is going to be more expensive than continuing subsidies for renewables. So that’s the economic idiocy of the Chancellor and the fact he really doesn’t understand how the market has changed. I think the Treasury will have to wake up very soon or there’s going to be some very expensive and silly mistakes made.”
One of the reasons behind the government cutting green subsidies is to lower consumer bills however, Mr Davey believes the arguments are “very poor”.
He told ELN: “The impact on people’s bills of these green projects is much smaller… In fact, movements in the wholesale price of energy massively override these. We’ve seen a big fall in the wholesale price of electricity and gas and that means people’s bills are cheaper, it’s nothing to do with stopping green energy. In fact, because they’re cheaper you could argue that it’s time to invest in green energy because it’s not so expensive for people.
“So their arguments really are very poor and quite worrying for a government that says it knows about business and investment. It’s undermining the possibility of tens of billions of pounds of investment from around the world coming into the UK by an argument which doesn’t hold water. So if you’re a business person or an environmentalist, you should be very worried about this government’s energy policies.”
Mr Davey was speaking at an event in London today.