Labour’s energy claims are ‘divorced from reality’

The Labour Party is saying that its energy policies – a rapid decarbonisation of the electricity system – will save consumers money. The claim is apparently based on an October 2023 report by Ember,[1] which says that a decarbonised electricity system can reduce bills by £300 per household.

However, the report also says[2] that the authors are assuming that windfarms in the future will secure ‘the same price as [Contracts for Difference] auction round 4’. The prices achieved in Round 4 (£37.50) are around half the price (£73/MWh) currently on offer to offshore windfarms in Round 6 [3]. And industry insiders are suggesting that even the latter figure may be inadequate.[4]

In other words, Labour’s savings rely on assuming that wind power costs half of what it actually does.

A second problem Labour’s putative savings figure is that Ember’s report compares bills in their hypothetical decarbonised electricity system against bills in the third quarter of 2023, which were still inflated by the Ukraine war.

Net Zero Watch director Andrew Montford said:

Labour’s claim of a reduction in household bills is based on figures that are entirely divorced from today’s reality.

And Mr Montford continued by calling for a new reality-based debate on Net Zero.

When it comes to energy policy, the political establishment is operating in a fact-free void. For the sake of the country, they need to start asking very hard questions about what they are being told by civil servants and environmental activists like Ember.

Notes for editors

[1] https://ember-climate.org/app/uploads/2023/10/Report_-Cutting-the-bills_-UK-households-profit-from-clean-power.pdf

[2] Page 20.

[3] All values are in 2012 prices, as is standard practice when discussing CfDs. In current prices, AR4 is worth £47/MWh, and AR6 is offering around £102/MWh.

[4] https://www.thetimes.co.uk/article/offshore-wind-needs-bigger-subsidies-warns-government-adviser-p3d823xjv