Guest Blog: Mervyn Bowden – Well, this is clearly war…

So following my last blog, where I pounded Ed “The Freezer” Miliband for his frightening lack of understanding, how about the other Ed? Oh my, Mr Davey. In some ways our Energy […]

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By Priyanka Shrestha

So following my last blog, where I pounded Ed “The Freezer” Miliband for his frightening lack of understanding, how about the other Ed?

Oh my, Mr Davey. In some ways our Energy Secretary is in a tricky spot. The problem for energy prices here involves the Electricity Market Reform proposals and the price premium associated with some types of energy.

The EDF deal on Hinkley Point has been settled at a price above £90/MWh – everyone seems to accept this generation is desperately needed but is coming far too late. Even some help potentially with the finance from the paragons of clean energy generation, the Chinese!

Many of the subsidies for renewable generation involving double ROCs are giving subsidies of £90/MWh alone the equivalent of £140+/MWh when the market price is added. That’s against a prevailing market price of £50-£60/MWh and way higher than coal generation which is still providing 40% of our needs.

Who’s doing the sums for DECC?

DECC, disingenuously, is meanwhile insisting energy prices will come down in the longer term due to energy efficiency! Not sure who does the sums for them but surely there’s more investment required to bring about these improvements… the only way unit fuel prices are going is up. Any reductions in bills will be because property owners have spent significant sums to improve efficiency.

There is one benefit from higher fuel prices – the return on investment for efficiency schemes improves proportionately and the higher fuel prices go, the more likely efficiency schemes are to happen.

The two “Ed’s”

If there’s an area where the two Eds are definitely culpable, in conjunction with a certain Mr Huhne, it’s the serious time-wasting involved with ridiculous and endless consultations which result in little or no change to legislation – certainly no points for the CRC (carbon reduction commitment) consultation where everyone’s views were completely ignored.

I’m actually simultaneously  a little encouraged and suspicious that “The Freezer’s” intervention seems to have kicked off a lot of activity. We now have energy chiefs summoned before MPs to explain their price rises. Even, indeed, to discuss how a spirit of competition can be introduced.

Cutting green subsidies?

But it’s totally crass for the Government now to be talking about scaling back on green subsidies. How is the industry supposed to operate under such levels of uncertainty? The measures have all been fully debated and “consulted on”, albeit with the loudest voices coming from the greatest of vested interests and long term investment plans put in place to deliver what the “Government” wanted.

There’s also clearly a need for the Government and other interested parties to better engage with the public in presenting a case for the economic and environmental need for renewable energy generation and why there’s a need to subsidise it.

A return to the Pool may not be such a bad idea but Ed “The Freezer” has no doubt lost so much credibility within the industry it has been trumped from all directions and will be lost in the freezing debate. Beware the sharks!!

Energy saving expert Mervyn Bowden is the Managing Director of Intuitive Energy Solutions and will be speaking at Energy Live 2013.