By Paul Homewood
Just a quick note to explain how the cost of subsidies for green energy is worked out, after some confusion in yesterday’s post. It is worth clarifying as it often gets queried:
The above figures come form the Office for Budget Responsibility, (OBR).
Environmental Levies reflect the costs added to energy bills via what is known as the Levy Control Framework, as opposed to being absorbed into general taxation. As I understand it, by law the government has to declare any costs imposed on consumers in this way as a result of direct government policy.
For 2021/22, the total cost of levies is £11.8bn. But this includes £0.4bn for Warm Homes Discount, which is a discount for low earners from their energy bills, funded as a surcharge on everybody else’s bills.
Therefore, strictly speaking, the cost of subsidies to renewable energy suppliers is £11.4bn, via Feed-in tariffs, Renewables Obligation, Contracts for Difference and Capacity Market.
Although the latter is paid out to non renewable generators to provide standby capacity, Capacity Market payments should necessarily be regarded as just another cost imposed on bill payers by intermittent renewable energy.
Finally, on to the £11.4bn we must add the cost of the Renewable Heat Incentive (RHI), which is £1.1bn. This is yet another subsidy offered to both homes and businesses who install renewable technologies for heating. As this is funded from general taxation, it is not included in Environmental Levies, but in general public expenditure. Instead it is listed just as a note.
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January 16, 2020 at 04:45AM
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