The UK government has come up with a striking announcement that it is making plans to slash subsidies for renewable sources so as to utilise that money to offer energy at lower prices. According to the government authorities, as green energy is derived from renewables like wind and solar farms, it is too expensive. The government plans to reduce subsidies and instead rely on competitive markets to generate and deliver green energy.
The announcement was done once the government admitted that its strategies would compel it to spend more than £9.1billion on green energy levies by 2020-21. Due to the levies, each household need to pay an annual amount of £110. The concern was more severe for subsidies given to offshore wind energy which reached a whopping £1.4billion last year from a much lesser amount of £253million in 2010.
The government authorities are planning a stable, long term roadmap to create a balanced energy market and to bring down the energy costs to a bare minimum. The announcement also stated that “The review will cover how best to support greater energy efficiency, the scope to use existing instruments to support further reductions in the cost of offshore wind once current commitments have been delivered, and how the Government can best work with the regulator Ofgem to ensure markets and networks operate as efficiently as possible in a low carbon system“.
Stressing upon the need of a competitive model, the authorities stated that “Subsidies and other forms of state support have played an important role in creating markets for new technologies and driving down their costs. But it is important that we move steadily to an operating model in which competitive markets deliver the energy on which our country depends”. However, the National Audit Office showed a different side of the story.
The NAO (National Audit Office) stated that even if the government slashes wind and solar energy subsidies, households should expect an energy cost of £110 a year as the planning are more beneficial for heavy industry and households would still be paying proportionately higher energy prices. This can be tumultous for the UK home owners as they need to bear a higher proportion of energy prices than the commercial energy customers.
In the words of the spokesperson from the Department for Business, Energy and Industrial Strategy, “In the years ahead the priority for our energy policy is affordability for households and businesses, and securing the economic benefits of a low carbon economy for the UK. That’s why we’ve commissioned a review of the opportunities to reduce the cost of achieving our decarbonisation goals in the power and industrial sectors”.
To conclude, the government plans to reduce energy prices by slaying green subsidies but that may not prove beneficial for home energy customers. Therefore, one should leverage government initiatives but still not forget to shop around. It is always advisable to compare energy prices and make a switch at periodic intervals to ensure that you get the cheapest deal possible.
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