13 March 2003 | David Arminas
Electricity buyers could face price hikes of up to 25 per cent because of the government's reliance on renewable energy.
Martin Rawlings, deputy chairman of the CIPS energy committee, warned that the failure of last month's white paper to back a nuclear energy programme in favour of emphasis on renewables such as windfarms and solar power would raise prices.
"Household prices could go up by 15 per cent, but for business, we could see between 25 and 30 per cent for both gas and electricity," he said.
The white paper, the government's strategy for UK power, did not foresee the building of any new nuclear power stations, which supply about 23 per cent of Britain's power, and will do so for at least five years.
Rawlings, who is also director of consultancy World Wide Energy, said that by that time, some nuclear plants will be decommissioned, forcing buyers to rely on renewable sources.
"It is relatively good news for companies committed to buying green energy because more will be around and it might even come down in cost," he said. "But it is still likely to be more expensive than other energy."
He predicted prices would rise from the middle of next year, as suppliers will rush to produce green energy once the government produces a bill based on the white paper.
Hugh Conway, electricity group chairman of the Major Energy Users Council, said industrial users had "reason to worry" about plans to make low-income households exempt from contributing to targets.
"The government has to balance the books somehow, so it's inevitable the extra costs will be passed on to industry," he said.
Both doubted the government would reach its target of suppliers offering 10 per cent of their energy from renewables by 2010. The white paper has pushed this up to 20 per cent by 2020.