Low carbon drive 'cuts household bills'

Britain's low carbon energy revolution is actually saving money for households, a report says.

Households make a net saving of £11 a month, according to analysis from the Committee on Climate Change.

It calculates that subsidies to wind and solar are adding £9 a month to the average bill, but that rules promoting energy efficiency save £20 a month.

The finding will be challenged by groups which say the UK spends too much on renewable energy.

Savings

But the committee, which advises the government, stands by its analysis, and forecasts a continuing trend of downward prices thanks to low carbon policy.

The trend is being driven by government and EU standards for gas boilers and household appliances like fridges and light bulbs. These bring down carbon emissions and bills at the same time.

It means households don't need to try specially hard to reduce energy usage - it just happens when they replace their old freezer.

The report says bills are about £115 lower in real terms since the Climate Change Act in 2008, having risen around £370 from 2004 to 2008 as international gas prices rose.

Gas and electricity use have been cut by 23% and 17% respectively, saving the average household £290 a year.

Many of the easy savings on highly inefficient devices have already been made, but the committee says it has been assured by manufacturers that more can be done.

The authors predict an annual bill reduction of £150 by 2030, driven by a mass switch to LED lights, and full take-up of more efficient condensing gas boilers.

This, they say, would more than compensate for another £100 a year rise from increased renewables deployment.

"What's interesting," said the committee chair Lord Deben, "is that people aren't having to strive to make these savings. They could save much more energy if they consciously set about it."

Stable bills

One huge area for improvement is home insulation. The committee says to meet its target to abolish fuel poverty, the government must double current investment.

Last week BBC News revealed that in order to meet targets to make all homes energy efficient, 25 million homes need to be refurbished by 2050 - that's 1.44 homes every minute, day and night.

A recent report from the House of Lords Economic Affairs Committee said energy bills had been pushed up by "poorly designed government interventions in pursuit of decarbonisation".

It said energy security rather than decarbonisation should be the priority. "It's a very high price that is being paid [for renewables]," said Lord Hollick, the committee chair.

The climate committee said this analysis was unfair because it wrongly blamed renewables for rises in wholesale energy costs between 2004-2008.

It insists that from 2008, when renewables policy started to bite, household bills have been more or less stable.

Lord Deben said that, contrary to popular opinion, household bills in the UK were around average for Europe, although many households could still save £200-300 a year switching from standard variable tariffs to the lowest available tariffs.

But he agreed with the Lords committee that industry bills were too high, and urged ministers to examine whether the transmission networks or the wholesale electricity market are to blame.

The government welcomed the report and said new policies on insulating homes would emerge before long.

'Burden'

Claire Jakobsson from the manufacturers' organization EEF said: "While the Committee is right to say low-carbon policies may not be the only factor reducing industrial output in some sectors, we believe it is a significant one - and one where government can act, especially in respect of costs which our competitors don't face."

Iain Wright MP, Chair of the Commons Business and Energy Committee, said: "The government must be mindful of the burden that decarbonisation policies can place on businesses and ensure that they remain competitive.

"[But] the big energy companies are too quick to blame green policies from government for unjustifiable price increases. There are enormous opportunities in the UK moving to a low carbon economy."

Follow Roger on Twitter @rharrabin