Make Energy Cheap Again

Here is what we need to do --now.

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This is a guest post by Maurice Cousins, Campaign Director at Net Zero Watch.

This week, Nigel Farage launched Reform’s economic agenda.

His argument was straightforward.

Britain has not been getting richer. We have kept headline GDP afloat by importing people and by increasing our national debt.

Real wealth, he argued, comes from productive industry, skilled labour and affordable energy. Without those, there is no path back to rising living standards.

Cheap energy was at the centre of his case for making Britain wealthy again. Farage, like Richard Tice, approaches this from first principles.

If energy is cheap and reliable, industry can function. If it is expensive and unreliable, industry contracts. This is a basic pre-condition that determines whether an economy grows or declines. It really is that simple.

The problem today is that Labour and Tory politicians have pushed Britain into an economic ‘doom-loop’.

High energy bills feed directly into the public finances. Lower productivity leads to lower company profits and lower wages. That means lower tax receipts.

The state then fills the gap by borrowing more, and because borrowing is now much more expensive an increasing share of our tax revenue goes on servicing this debt, which leaves less for everything else —like the NHS, schools, police, and prisons.

The tax burden in this country, then, will remain high until our enormous pile of debt can be reduced. Ending high energy bills is, therefore, essential to ending Britain’s economic doom-loop.

But this goes well beyond economics.

There is also a big social and political cost. High energy bills are no longer an abstract line on a utility bill. Unlike in the 1990s and early 2000s, where they were a background concern, they increasingly shape domestic life.

Focus groups by More in Common show even middle class families are rationing heating and hot water. Parents are having to explain to their children why the radiators cannot be turned on. Mothers talk of arguments over who gets to shower with the limited hot water, and the sense of powerlessness that comes from not being able to keep a home warm.

At present, Reform is the beneficiary of all this frustration - hence why Rachel Reeves is expected to slash green levies in the upcoming budget. But, as Labour is now learning the hard way, support built on anger is always conditional.

If Reform does not address this problem in the next Parliament, its advantage will evaporate. Another force will rise to occupy the space. It may come from the right or from the far-left. The point is that the demand for change will not go away.

With this in mind, Nigel Farage set out five policies to bring energy costs down, all of which make a great deal of sense.

First, he would end all Net Zero subsidies.

This would stop the market being skewed towards intermittent renewables and restore genuine price signals. Without fair price signals, dense and reliable power cannot attract investment. And without reliability, bills cannot fall. Affordability depends on stability of supply. Unreliable energy is, therefore, always expensive.

Second, he would reverse the North Sea tax regime.

Producing more of our own energy reduces imports and improves the balance of payments. If we import less energy, we gain great control over domestic prices and support jobs, growth and tax revenues.

Third, he would support new onshore gas development.

The North Sea is a mature basin, but domestic onshore resources could provide decades of supply at current demand. This is the fastest practical route to stabilising domestic primary energy needs and to supporting heavy industry while longer-term solutions, including new nuclear, are built.

Fourth, he would adopt a cost-disciplined new nuclear programme.

Natural gas to nuclear is the only coherent long-term foundation for a modern industrial economy. Both are dense and reliable sources of power generation. But new nuclear must be delivered in a standardised, repeatable and cost-controlled way.

This is what they do in South Korea, which has the most affordable new nuclear programme in the world. Unfortunately, the current British model is overregulated and slow. As such, we have the most expensive new nuclear in the world. That has to change if we are to get serious about reducing the long cost of electricity in the UK.

Finally, he would cancel the current offshore wind auction - which is essential to halting the rise in electricity bills. Scrapping Crazy Ed Miliband’s AR7 subsidy round, including any contracts signed before the next election, is no longer a fringe position.

It’s now being discussed openly by energy insiders, including Oxford University’s Professor Sir Dieter Helm, who argues that if Britain wants to restore its competitiveness, then these renewable contracts will need to be renegotiated.

This is something Richard Tice has been arguing since the summer —and he is right to do so.

To understand why AR7 matters, one has to look at how the electricity system functions in practice.

A high-renewables system is not simply more of the same power generated in a different way. Weather-dependent generation requires constant backup to ensure supply at all times.

When the wind is strong, the system must curtail generation and pay turbines not to produce. When the wind drops, it must call on gas at short notice. This requires running gas capacity in reserve. It also requires more transmission lines, more storage infrastructure and more balancing operations in the control room.

Every additional megawatt of intermittent generation therefore adds system costs. These are not marginal and they cannot be avoided. They are structural.

Once you commit to a certain level of renewables penetration, you commit to the balancing infrastructure that keeps the system stable.

AR7 commits the country to another wave of weather-dependent capacity at a time when the grid is already struggling to absorb the volume we have. If AR7 proceeds, we will be locked in to high electricity prices for the next twenty years by design.

This is the trap.

Once the contracts are signed, the economics of high bills becomes embedded and extremely difficult to reverse. Energy policy determines the fate of the economy and so what happens next will have enormous consequences on our country.

If we get this wrong, decline is unavoidable. But if we get this right, then is a path back to growth and to rising living standards.

This is why, this week, we at Net Zero Watch have launched a campaign to make energy cheap again. This isn’t only about doing the things Nigel Farage and Reform are suggesting; it’s also about taking action right now, by writing to your MP about this very specific and very urgent issue.

So, if you’d like to join our campaign by calling on your MP to halt Crazy Ed Miliband’s latest renewable subsidy auction, that will lock us all into higher electricity prices, then you can do so below.

Thanks for reading.

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Net Zero Watch has launched a new campaign to make energy cheap again. We are calling on MPs to halt Ed Miliband’s latest renewable subsidy auction, known as Allocation Round 7 (AR7). This auction will lock Britain into higher electricity prices for years to come. Click here to contact your MP today and ask them to put affordable energy first.

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