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Tuesday, August 08, 2017

UK launches independent energy review

One of the UK's leading energy experts, Dieter Helm, will undertake a wholesale review of how to ensure a cost-effective energy supply for the UK, as the government seeks to allay fears around cost, security and reliability.

Prof Helm, a professor of economic policy at Oxford University, will examine all elements of the UK's energy supply chain, from generation to supply to individual consumers.

The review, announced on Sunday by the Department for Business, Energy and Industrial Strategy, stems from a commitment made in the government's industrial strategy green paper in January, when it said it would conduct a review of how to deliver affordable energy and ensure clean growth.

However, the issue has taken on extra charge since the general election, according to The Financial Times.

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Before the election, Prime Minister Theresa May promised to cut bills for 17million households, a pledge that has since been considerably watered down.

It also follows controversy over British Gas's decision to raise electricity prices for many consumers by 12.5 per cent, despite falling wholesale energy prices. The supplier blamed the rise on the effects of government policies on its costs.

While the UK's domestic electricity and gas prices are relatively low compared with other European countries, costs for businesses are high. The UK has the third-highest industrial electricity costs among a group of 15 core EU countries, according to BEIS.

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Announcing the review, Greg Clark, Business Secretary, said the government wanted to find opportunities to keep energy costs low while continuing to meet the government's climate change targets. "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," Mr Clark said.

There are long-term concerns both about whether the UK will have sufficient generating capacity to meet its future needs, particularly at peak times, and the costs of the electricity. The country is obtaining a rising share of its energy supply from more intermittent sources, such as wind and solar power.

But the deal struck to ensure the building of the £20 billion Hinkley Point nuclear power station, which should provide reliable, round-the-clock electricity, ties consumers into paying what the UK government's spending watchdog has warned could be £30 billion more than market prices for the energy.

Read the full report here.