How much money do wind subsidies add to domestic fuel bills?

Posted on 27 February 2012

This question has caused plenty of vexed debate over the past year in the media and among politicians. But the position of The Department of Energy and Climate Change (DECC) is quite clear. In its 2011 annual energy statement, it stated that green policies such as the renewables obligation (RO) – which ensures that suppliers generate an increasing proportion of electricity from renewable sources – add £20 to the average domestic fuel bill each year.

RenewableUK, a trade association representing the renewable energy sector, says that 47% of this total can be attributed to wind. “So we normally say that for wind power the RO adds £10 per year to people’s fuel bills,” says a spokesman.

Much of the heat in this debate is about the predicted future burden of “green taxes” on domestic fuel bills. DECC calculates that its policies will add £48 to bills by 2020 (compared with its £20 figure for 2011). However, it argues that its overall push for renewables and energy efficiency will lead to a net decrease in energy bills – a much contested claim, it should be stressed – because consumers will be less reliant on the ever-rising cost of fossil fuels such as coal, oil and gas.

An additional upward pressure on bills in coming years will be the shared cost of upgrading the UK’s energy infrastructure, not just in terms of generating, but also transmission. Ofgem, the energy market regulator, predicts that around £30bn will need to be spent upgrading ageing infrastructure over the next decade, adding a further £60 each year to energy bills. Apportioning a percentage of this figure to wind alone, though, is almost impossible.