David Prosser: The soaring cost of making sure the lights don't go out

Outlook: It is not at all clear the firms in the business of building nuclear power plants are yet persuaded they want to invest the sums required in Britain

Centrica's warning yesterday could not have been much clearer. Unless we see a dramatic fall in prices on the wholesale energy markets in the next few weeks – unlikely – households will see a round of bill increases before the end of the year.

That's the bad news. And here's the really bad news: irrespective of what happens to wholesale energy prices over the years ahead, your bills are going to get even more expensive as Britain strives to meet its climate-change targets.

So much so that the Committee on Climate Change, the independent governmental advisory panel, now thinks Britain should be rethinking the current plan for changing its energy mix over the next two decades.

In particular, the panel said yesterday, Britain needs to scale back expensive investments in offshore wind and build more nuclear reactors instead – the latter being a cheaper route to low-carbon energy.

The economics of that recommendation make sense, but there are a couple of problems. First, nuclear power is not a renewable source of energy, which will force the Government to work even harder not to break Britain's promise to derive 15 per cent of energy for power, heat and transport from renewables by 2020.

Second – and potentially even more problematic – it is not at all clear that the few companies in the business of building nuclear power plants are yet persuaded they want to invest the sums required for our existing programme of expansion, let alone an even more ambitious schedule of works.

That was true even before the awful disaster that struck Japan this year. But post-Fukushima, the challenges are more demanding still. In Britain, our top inspector has been asked to review the safety of nuclear technology – at the least, the inquiry adds to the uncertainties confronting those considering huge investments. In Germany, home to RWE and EON, two of the would-be builders of Britain's plants, Green politicians have such power that the country's nuclear industry looks set to grind to a halt.

Britain is not alone in facing these problems, but it is unique in having to manage the transition to low-carbon technologies at the same time as a whole generation of ageing power plants comes to the end of their shelf life.

The danger is that we fall between two stools: that in 2020 we discover in trying tobalance both these demands, we have neither hit our renewables target nor replaced enough power-generation capacity to meet the country's needs.

If not nuclear, then what? Well, assuming we can find other ways to hit the 15 per cent quota, gas – back to Centrica, then – is the easiest way to make up the shortfall. Still, let's hope we can still afford it by then. With Germany getting away from nuclear and Asia buying up more supplies from Europe, the price is only going to head in one direction in the years ahead.

Three years ago, when home-energy bills hit a record high, one in five households in Britain was deemed to be living in fuel poverty – unable to afford energy bills. That's a shocking statistic for a wealthy nation, but it is a high that may be quickly surpassed in the years ahead.



A year isn't a long enough time in politics

Happy anniversary. A year to the day since the Liberal Democrats dropped election campaign objections to George Osborne's deficit-reduction plans in order to go into coalition government, the likes of Danny Alexander will no doubt argue that decision has been proved right. Despite fears that coalition politics might increase the uncertainties about Britain's ability to get on top of its public finances, the Chancellor, aided by the tough approach to spending departments taken by his chief secretary, can boast of borrowing costs that are only marginally higher than those of Germany.

Compare Britain's situation to that of Greece, the Coalition will no doubt say yet again today, where the failure to address borrowing led to economic and financialdisaster. Helpfully, the Greeks are going through another crisis just now, lending a little more credibility to the Government's arguments.

So far so good. But the key to restoring Britain's public finances in the medium and longer term are in a return to strong economic growth, rather than the austerity measures of the past year. Debt has not even begun to fall yet.

On this test, the Coalition's story is less happy: its enemies – in the Labour Party and in parts of the economics community – warned that cutting spending and squeezing household incomes was unlikely to be conducive to sustained economic recovery. So it is proving: the recovery is faltering and forecasters, whether supportive of the Chancellor's strategy or not, are falling over themselves to cut their expectations of GDP growth this year and next.

Mr Osborne's current attack line of choice when Labour point this out is that had they won power, the Opposition would have made cuts almost as severe as the Government's. That may be the case, but if so it rather undermines the Chancellor's argument that only his plans would give Britain's creditors the confidence to extend us the low borrowing costs we s enjoy.

The jury is out, in other words. Unless the economy begins to move closer to the economic growth targets on which Mr Osborne's plans are predicated, the doubts about his strategy will grow. That would leave the Liberal Democrats open to the challenge of having switched horses, in terms of economic policy, at the last minute to secure power.

The implications are political, too. Leaving aside self-interest, the Conservatives and the Liberal Democrats must make the Coalition work because its collapse would leave Britain vulnerable to the sort of uncertainty Mr Osborne warned would be so disastrous last May.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies