Questions asked about timing

Clark orders review into cost of Britain’s energy

Greg Clark
Greg Clark: ‘system needs to be fit for the future’

UK Energy Minister Greg Clark has ordered an independent review into the cost of energy, drawing criticism that the government’s policy is in disarray.

The review, led by Professor Dieter Helm, will recommend ways to keep energy prices as low as possible as part of the Industrial Strategy, says Mr Clark.

Professor Helm, one of Britain’s leading energy experts, will look specifically at how the energy industry, Government and regulators can keep the cost of electricity as low as possible, while ensuring the UK meets its domestic and international climate targets. 

One commentator said: “It would have been better to have done this before the government proposed a price cap [in the general election campaign] and then took it off the table.”

The announcement came just days after British Gas announced a sharp hike in the cost of household electricity bills.

Neil Carberry, CBI Managing Director for People and Infrastructure, said:Competitive energy prices are an important part of a meaningful industrial strategy.

“The CBI looks forward to working with the review to ensure any recommendations support continued business investment and innovation in a secure, flexible and low-carbon energy supply, together with efforts to improve energy efficiency.”

The review builds on the commitment made in the Industrial Strategy Green Paper and will consider the whole electricity supply chain – generation, transmission, distribution and supply.

It will look for opportunities to reduce costs in each element and consider the implications of the changing demand for electricity, including the role of innovative technologies such as electric vehicles, storage, robotics and artificial intelligence.

Hinkley nuclear power station

The ambition is for the UK to have the lowest energy costs in Europe, for both households and businesses.

Mr Clark said: “All homes and businesses rely on an affordable and secure energy supply and the Government is upgrading our energy system to make it fit for the future.

“We want to ensure we continue to find the opportunities to keep energy costs as low as possible, while meeting our climate change targets, as part of the Industrial Strategy.

“The review will consider how we can take advantage of changes to our power system and new technologies to ensure clean, secure and affordable supplies over the coming decades. Professor Helm will bring invaluable expertise to the review, and I look forward to seeing his recommendations.”

Professor Helm is one of Britain’s energy experts, a Professor of Economic Policy at the University of Oxford and a Fellow in Economics at New College Oxford, and a former member of the Council of Science and Technology, advising the UK Prime Minister from 2004 to 2007.

He said: “The Cost of Energy always matters to households and companies, and especially now in these exceptional times, with huge investment requirements to meet the decarbonisation and security challenges ahead over the next decade and beyond.

“Digitalisation, electric transport and smart and decentralised systems offer great opportunities. It is imperative to do all this efficiently, to minimise the burdens. Making people and companies pay excessively for policy and market inefficiencies risks undermining the objectives themselves.

“My review will be independent and sort out the facts from the myths about the cost of energy, and make recommendations about how to more effectively achieve the overall objectives.”

The Government is already taking action, and has asked the regulator to come forward with proposals to extend the price protection currently in place for some vulnerable energy consumers to more people on the poorest value tariffs. This builds on action taken to cap the price for 4 million pre-payment meter customers which came into force on 1 April 2017.

There are also a number of schemes in place to reduce energy bills by improving energy efficiency, such as the Energy Company Obligation which will upgrade 200,000 homes each year and help tackle fuel poverty. For business, the package of relief for energy intensive industries was worth £260 million last year and there are financial incentives to switch to cleaner fuels and processes.

This review will consider the electricity system as a whole and make recommendations on how to deliver affordable energy over the coming decades. It follows the plan set out in July by Government and Ofgem for a smarter energy system and the commitment to ensure Britain’s energy costs are as low as possible.

An advisory panel will support the reviewer by providing expert insights in a personal capacity:

  • Terry Scuoler CBE, Chief Executive of EEF, the Manufacturers’ Organisation

  • Nick Winser CBE, Chairman of the Energy Systems Catapult

  • Laura Sandys, Chief Executive of Challenging Ideas

  • Isobel Sheldon, Engineering & Technology Director of Johnson Matthey Battery Systems

  • Richard Nourse, Managing Partner of Greencoat Capital LLP

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