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May 21, 2024

Experts Suggest Switching to Renewables Could Create a Price Surge

Experts claim that switching to renewable energy could increase household energy bills by £29bn per year, despite the promise of cheap green energy.

Data from the Resolution Foundation claims that investment in Net Zero would leave the average household £400 worse off, but the poorest households could be up to £700 worse off.

The foundation claims that cheap renewable energy for homes and electric vehicles was promised based on low-interest rates to pay for the upfront cost of renewable energy investment and grid expansion. However, borrowing costs have spiked since the energy crisis, and they may remain at high levels for some time. This would increase the cost for the net zero transition, which household energy bills cover.

If higher interest rates remain at around nine per cent, it could add £29 billion a year to household energy bills by 2050. This means the average household bill will increase by £400 per year compared to the average bill before the energy crisis. However, despite this increase, energy bills would still be lower than in 2023 due to recent price shocks, according to reports.

Jonathan Marshall, senior economist at the Resolution Foundation, said:

“Interest rates could remain high and that could cause issues, both in terms of the pace of building things, but also the implications on household finances as well
“Cleaner energy could be cheaper energy, if interest rates return to the low levels seen during the 2010s but we can’t count on that being the case. If interest rates stay high, energy costs will rise rather than fall in the years ahead.
“Now is the time for planning on how we deliver the energy investment surge while protecting lower income households, with a greater focus on price reduction in contracts, price protection for vulnerable households, and rethinking the role of the state as an investor,”

What is Net Zero?

The 'net-zero target' refers to a government commitment to ensure the UK reduces its greenhouse gas emissions by 100% from 1990 levels by 2050.  If met, this would mean the amount of greenhouse gas emissions produced by the UK would be equal to or less than the emissions removed by the UK from the environment.

What is renewable energy?

Renewable energy, also referred to as green energy or low-carbon energy, is any form of energy that is generated through renewable resources like wind farms, solar farms, hydropower, geothermal energy, and more.

What are the benefits of renewable energy?

The primary benefit of renewable energy is the reduction in carbon emissions and air pollution from energy production. However, another major benefit includes the enhanced reliability, security, and resilience of the power grid.

Other positive impacts include the creation of new job roles, lower energy costs after the initial set-up expenses, and expanded energy access in remote, coastal, or isolated communities.

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