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Gas is Dragging Up the Cost of Renewables – Watts Up With That?

Essay by Eric Worrall

According to The Guardian, a publicly owned company could overcome the impediment of private companies, which are reluctant to cut household energy bills by investing in renewables.

There’s a simple way to reduce the average UK electricity bill – and make energy cleaner

Christopher Hayes
Thu 6 Apr 2023 01.30 AEST

Recent research estimates that a publicly owned generating company could reduce electricity costs by £252 per household a year

The price spike currently afflicting customers, retail suppliers and government alike originates in the domestic wholesale energy market. Despite 43% of our electricity being generated from clean energy sources, prices are determined by the most expensive source needed to satisfy 100% of the demand in a given period. The result is that energy derived from mainly clean sources is being slapped with a gas price tag. What then fills the yawning chasm between these generators’ lower production costs and the higher price they’re getting? Profit. Just look at British Gas-owner Centrica’s 60% profit margins in its generation business.

Public ownership of the UK’s clean energy generation, selling at cost without markup, is the only option that short-circuits the trade-offs that we otherwise take as given, such as the urgent need to decouple the price of clean energy from gas; and to supercharge investment in clean energy.

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To accept Christopher Hayes argument, you have to believe that private companies are refusing to invest in enough renewables to bring down the price of energy, because they don’t want to make a profit, and that public ownership is required to short circuit their reluctance to make money?

Or is Chris trying to hint that renewables are too expensive for private companies to afford, despite being the cheapest form of energy?

Perhaps WUWT readers can explain to me what Chris is trying to say.

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