E.ON UK chief warns power shift will send household bills soaring

The era of cheap and plentiful energy to which we have become so accustomed is about to give way to a new age of scarce and expensive power that will see household bills rocket, said Paul Golby, the chief executive of E.ON UK.

He warned that over the next 12 years, the industry and the Government will need to invest some £100bn to meet ambitious carbon-reduction targets and a looming generation gap. The predictions came in the company's UK Energy Manifesto, which was published yesterday.

It was the starkest warning yet in a growing public debate about what Bob Taylor, head of E.ON UK's Generation business, called "the most challenging period that the industry has ever faced, including when the current energy system was effectively built in the middle of the last century". By 2020, the UK must be producing nearly 40 per cent of its energy from renewable resources, an eightfold increase from today's 5 per cent. The biggest component of this green energy revolution is expected to come from windpower. Because wind is intermittent, the country must vastly overbuild generation capacity to be able to guarantee minimum production, meaning that the country's total generation capacity will need to increase from today's level of 76 gigawatts to 120 gigawatts by 2020.

The question of who will pay to replace ageing, dirty power stations with a fleet of green alternatives must be addressed now, E.ON UK said yesterday. Politicians enjoy the political kudos they get from championing green initiatives, but have been conspicuously reticent on the topic of what that will mean for household bills or required Government subsidies. Mr Golby called for a "more real, more honest, and more urgent" debate on how that will work. He added: "Decisions taken over the next 12 months will determine how we make and what we pay for energy in the UK over the next 20 years."