Energy costs will rise no matter what policy scenario

The costs of energy for business are set to rise no matter what policy or fuel mix we use, according to a new report by the London School of Economics. […]

Register now!

By Vicky Ellis

The costs of energy for business are set to rise no matter what policy or fuel mix we use, according to a new report by the London School of Economics.

The Future Report, called “Demanding times for energy in the UK”, looks at four scenarios for the energy market. Report author Dr Sam Fankhauser said that it had been hard to find one where prices don’t go up.

Commissioned by energy supplier npower, the first scenario looks at the UK’s current intent to use a balanced energy mix. It suggests what will happen if our energy policy gets all the funding and government support it needs. Under this course, the report predicts low to moderate costs for consumers.

Other scenarios sketch out how the impact of Government backtracking on decarbonisation could spark a new dash for gas. This would see emissions increase significantly compared with the UK’s current course. An investment shortfall down to similar failure in Government policy creating huge investor uncertainty would prompt an even bigger leap in emissions versus current policy plans.

The fourth scenario in the npower report analyses the possibility of spiralling costs if carbon capture and storage doesn’t live up to its promise, renewable energy costs don’t come down and nuclear power is more expensive than expected. In this scenario, environmental obligations are stuck to with relatively low emissions.

But higher costs to businesses are almost inevitable, said Dr Fankhauser: “Prices are going up in all scenarios. It was quite hard for us to find a scenario where prices wouldn’t go up. I think that is just not part of our electricity future for the next 10 to 15 years, there’s just so much investment that has to happen.”

Related stories:

The Global Energy Conversation Part II: Solutions to 2050

Business energy users can avoid ‘highly possible’ future price rises

Last of the Big Six’s summer price rises kick in

The Market Report – 7th November 2011