A report which claims that Government can meet its 2020 carbon emission targets more cost effectively by ignoring renewable technologies and instead installing just nuclear and gas-fired power stations has come under heavy criticism from the renewable industry and Government.
The report, by AF consult, claims to “look at the lowest cost way of getting to the targets the UK has accepted for reducing its greenhouse gas emissions.” The paper modelled three separate policy scenarios and estimated the associated costs of each scenario in meeting targets.
Scenario one modelled the least cost way of meeting electricity demand without policy demand. AF predicts that such a scenario would incur total generation costs of £780 billion at 5.8p/kWh.
Scenario two modelled the cheapest method of meeting electricity demand whilst hitting carbon reduction targets. AF suggests that the cheapest method of meeting the UK’s carbon emission targets would be a combination of nuclear and gas at a total cost of £960 million at 7.2p/kWh.
Scenario three was identical to scenario two, but added the additional requirement of meeting renewable electricity generation targets. AF predicts that adding renewables into the mix would increase total generation costs by 15 percent, to £1,100 billion, at a cost of 8.4p/kWh.
The report concludes that the introduction of renewable targets and emissions will add around 40 percent extra overall costs compared to no targets at all.
REA Chief Executive Gaynor Hartnell hit back at the report, stating: “It is not just a question of finding the cheapest way to save carbon. A secure energy future is one where the fuels don’t run out, and nor do the places to store their waste. Do we really want to remain tied to unstable political regimes, or to the end of a pipeline which is tapped into by lots of energy-hungry economies before it reaches us? Renewable energy solves these problems, and brings many other advantages.”
Hartnell continued: “We have an ambitious renewable energy target for good reason. The challenge to Government is to achieve it cost-effectively. This means clear policy intent, backed up by stable policies to deliver. Government needs to stand behind the targets it recently endorsed and widen its focus to encompass renewables at the cheaper end of the spectrum.”
The study was originally developed in conjunction with consultancy KPMG, but a leaked press release which was used as the basis for a number of articles criticising renewable technologies led to intense pressure from green bodies and as a result KPMG decided to scrap publishing the report.
A spokeswoman for the Department of Energy and Climate Change derided the findings as “near pointless” due to the report’s flawed assumptions. DECC continued: “AF aren’t planning for enough generation capacity, they are putting all our eggs into just two energy technologies and they are keeping their fingers crossed that gas prices come good.
“If this sort of short-sighted analysis informed our policies we’d not meet our carbon emission targets and keep the lights on, and the consumer would certainly be worse off.
DECC concluded: “The bargain basement is not the place to look for a responsible long term energy strategy.”