Could Moving to Renewables Save the UK Energy Bill Payer Money?

It’s now known that it’s cheaper to produce energy from wind than gas. Since the government announced its energy security strategy, many climate experts and activists are asking why the UK is not speeding up the change to net zero.

It became cheaper to produce a unit of energy from a wind farm than a gas-fired power station for the first time in 2021 due to rising fuel costs as well as technological advancements in the wind sector.

To calculate how expensive, it is to produce energy from different sources you need to consider all the different costs over the lifetime of a plant including the build, the fuel, the maintenance and how much energy it can provide over that time.

Sky News has seen figures that show that the cost of producing energy from onshore wind will be less than half the cost of producing energy from gas this year and could fall to a quarter in 2023. According to researchers at BloombergNEF, offshore wind is less than two thirds of the price of energy from gas stations.

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The use of wind for energy has multiplied almost 20 times in the last 10 years making it the second biggest contributor of energy in the UK. The environmental benefits have been behind most of its rise so far, but political and economic factors are responsible for recent acceleration.

At the beginning of April, the price of a standard energy bill rose by more than 50% meaning that more than a quarter of homes in the UK were forced into fuel poverty. Wind being cheaper than gas is more important than ever now not just for environmental reasons.

The Energy Security Strategy was aimed at both reducing the UK’s reliance on Russian oil and gas and tackling the soaring energy prices.

Many climate experts believe that the UK’s Energy Security Strategy should have gone further and faster on energy efficiency and onshore wind. They think that the government has missed vital opportunities to cut bills at the same time as cutting emissions.

Community England are disappointed that the Energy Security Strategy contains nothing new on energy efficiency, demand reduction or communities taking control of their energy. The strategy is similar to the government’s previous 10-point plan which focussed mainly on big-cheque, centralised, supply-side measures that will be owned and controlled by big business, for profit.

The strategy does not enable the localisation and democratisation of energy so important to increased efficiency and achieving net zero. Nor does it address the challenge of improving Europe’s draughtiest houses which would not only save people money in the UK but also save carbon, lives and health costs.

Community England support the increased emphasis on wind and solar which can deliver genuinely low-carbon, low-cost home-grown energy. They welcome the emphasis on increasing solar for domestic and commercial rooftops as this is an area that Community England has been particularly effective in. Community solar projects can bring benefits directly to vulnerable communities. They would however, like to see more support for onshore wind, the cheapest form of renewable energy.

Bills are still high partly due to how the National Grid Electricity System Operator (ESO) balances the energy that we use.

The National Grid ESO uses sophisticated models to predict how much energy the country will need for a given half hour period. This is based on people’s habits such as when they cook or turn lights on as well as how cold it is and how many people will have heating on. The ESO then brings on board energy using the cheapest suppliers it can to fulfil that need.

A National Grid ESO spokesperson said:

“The rules of our license mean we must always bring on the cheapest form of electricity available, we are technology agnostic. Prices are market driven so we are not immune to global issues like the rise in the cost of wholesale gas. We have a diverse generation mix and as we bring on more renewable energy, with the technology to store that energy, we will become more energy independent.”

Wind, solar and tidal provide the cheapest energy, then nuclear followed by the most efficient gas suppliers. If there is still demand left over then ESO have to resort to the most expensive gas and coal providers. The cheapest sources of energy are balanced against the most expensive but the billpayer ends up paying for the total cost of that.

Unfortunately, we are still paying for energy from older wind farms which have not benefited from the recent technological advancements which makes it more expensive.

Dr Simon Evans, deputy editor and policy editor at climate change publication Climate Brief, said:

“Renewables shaved the equivalent of about £10 off bills last winter and would have saved about £100 if we’d already built the wind and solar farms that are under contract or expected to be granted contracts in the summer. But the wholesale price of gas is still most important in setting the price we pay – it has driven about 90% of the increase in bills. If we had more renewables, they would be taking more of the edge off the higher bills.”

In the past the National Grid ESO has been able to reliably predict how much energy a given gas or coal power station will produce per hour, and match that against how much energy they think we’ll need.

However, now that the UK is using more wind, supply is less predictable short-term. In the same way that the UK cannot control the global price of gas and oil, it also can’t predict how much the wind will blow or the sun will shine.  There will be periods of time when it’s cold, calm and dark.

Storing the energy created from wind and solar is the obvious solution to this when more is being produced that can be used at the time.

Typically, storage is either in batteries or in the form of hydrogen that can be extracted from water when the turbine is running and stored to be burned when it’s needed later.

These storage options can be expensive even if the fuel is free though Dr Evans says that a renewable system such as this would still be cheaper overall.

Dr Evans said:

“Because wind and solar are so very cheap, the overall costs are lower even when you pay for storage and for building the storage technology. The way that consumers pay for and use energy at the moment means the hour-by-hour changes won’t be that noticeable – you’ll just see the overall price going down. But we may get to a stage where we can set smart chargers to charge your electric car only when the wind is blowing strongly and can sell energy back to the grid when it’s not.”

Stew Horne, Energy Saving Trust’s head of policy thinks that there are two important areas where the government’s strategy has fallen short. He believes that improving the UK’s largely inefficient housing stock and investing in the electrification of heat would help the UK to strengthen energy security and lower bills now and in the longer term. Accelerating the installation of heat pumps which are available now combined with the implementation of energy efficiency measures would provide a long-term solution. The demand for gas to heat our homes could be significantly cut.

The International Energy Agency (IEA) has said that we cannot exploit any new fossil fuel reserves if we are to achieve the 1.5-degree goal. They have also stressed that not only is nuclear much more expensive than renewables but that it won’t deliver low carbon electricity below the Climate Change Committee’s 50g p kWh threshold. It uses huge amounts of fossil energy in the construction stage, front-loading emissions at a critical time when we should be reducing them. The IEA believes that the UK should be investing in flexibility and storage to enable greater penetration of genuinely low-carbon variable renewables.