Investing in renewable energy generation rather than the government’s current low carbon energy policy could help the UK save around £420 million between 2020 and 2025.
That’s according to a report from Green Alliance which added a low carbon generation gap of 20TWh could be created as a result of the current regulations.
The ‘Beyond Subsidy: How the next levy control framework can cut carbon at least cost’ report urges the government to support a wider range of green energy technologies in the early 2020s and create conditions which will allow most technologies to be subsidy-free after 2025.
The call comes ahead Chancellor George Osborne’s Budget announcement tomorrow.
The report stated the cost of new low carbon electricity generation is being exaggerated by Treasury by more than six times as the calculations incorporate the cost of building any projects.
The analysis shows a low carbon scenario with £2.7 million in subsidies could see the new Levy Control Framework (LCF) costs reduce by around a third after 2020.
This strategy would also deliver 90TWh of power through solar, tidal, offshore and onshore projects by 2025, the report added.
Dustin Benton, Lead Author of the study said: “Subsidy free renewables are within sight but their cost is exaggerated by current policy. To meet carbon targets and protect consumers from higher costs, we should focus on how to make all renewables cheaper than other forms of power, which is already the case for the best solar and wind projects.
“The Chancellor should use the 2016 Budget to correct this imbalance in UK energy policy and by doing so can reduce the cost of low carbon subsidy. Our research suggests that this can be largely eliminated by 2025 if policy backs the cheapest and most scalable projects.”
Last week, a coalition of businesses urged the government to keep mandatory carbon reporting.