Net cost of renewable subsidies nearly two-thirds less than LCF states, claims Good Energy report

The net cost of wind and solar incurred by the government was almost two-thirds (58%) less than costs reflected in the Levy Control Framework, a report by renewables utility Good Energy has claimed.

The study found that deployment of onshore wind and solar reduced the wholesale cost of electricity by £1.55 billion in 2014, meaning that the net cost of their subsidy cost amounted to just £1.12 billion.

The report also claimed that if existing savings were maintained, future deployment of the technologies could actually deliver net cost benefits to consumers, defying the Department of Energy and Climate Change's reasonings behind recent and planned cuts to renewables support.

Good Energy's study uses the Merit Order Effect, which details how the cheapest available energy generation technologies are used to meet demand at any one time. As renewables generate cheaper electricity according to the Merit Order, the price paid to all generators decreases when they are generating.

Good Energy's report states that when the Merit Order Effect is applied to the LCF, and renewables support is viewed in net terms, the much-vaunted budgetary overspend may not be a reality.

Juliet Davenport, chief executive at Good Energy, said the study put bill payers “at the centre of the debate”.

“Let's give them the full picture and not just half of it.

“What is not taken into account is the fact that renewable energy, such as wind and solar, has actually been bringing the cost of energy down for consumers.

“The bill-payer money invested into supporting renewables yields significant benefits, let's be very clear about that,” she said.

Meanwhile the Solar Trade Association, who has today addressed an open letter to Amber Rudd detailing its '£1 rescue plan' to save solar deployment, said the report's publication was timely considering the closure of the government's feed-in tariff consultation this Friday.

“This analysis shows that the net effect on bills of supporting new rooftop solar – under the STA's £1 plan – is zero. The £100m we need added to consumer bills over three years will be completely offset by the savings from solar lowering the wholesale price. This is just the evidence that the Government needs,” said an STA spokesperson.