Labour plans multi-billion-pound gas subsidies to keep lights on
Taxpayers face bill to fund renewables while also paying grants to persuade energy firms to maintain capacity
NICK GUTTERIDGE
Taxpayers face paying billions to subsidise the UK’s gas supply as Ed Miliband’s net zero crusade drives energy firms to pull investment from Britain.
Ministers are drawing up plans for taxpayer-funded grants to discourage gas providers from scaling back capacity because of the focus on renewables. They are also considering proposals for new state-funded gas storage facilities, to avert the threat of blackouts during periods of high demand.
The growth of heavily subsidised wind and solar power means gas makes up an increasingly small part of Britain’s energy mix through much of the year. But the country is still heavily reliant on gas in winter, especially during periods of “dunkelflaute”, when there is a lack of wind and sun.
In a report published on Monday, the net zero department warned that the UK could begin running short of gas from the start of the 2030s. It found that “weak commercial incentives and the declining overall demand for gas” meant there was a risk of the “erosion” of capacity in the system.
[…]
Companies that responded to a Whitehall consultation blamed the net zero transition for making it less profitable to supply gas. They argued that it would not be commercially viable to maintain current capacity in the system to cope with occasional periods of high demand.
The report noted that some market operators had already decided to reduce capacity in Britain, whilst others had “been open about potential plans” to do so.
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Political opponents said the dash to renewables meant taxpayers being hit with a double whammy of subsidising both green energy and fossil fuels.
Richard Tice, Reform UK’s deputy leader, said the plans showed that “the Government has lost the plot” in its pursuit of net zero targets.
He said: “First they subsidise renewables heavily. Then they realise the wind does not always blow nor the sun always shine and we have huge blackout risk.
“So now they subsidise gas to billions of pounds to act as backup. The result is households being fleeced by vast subsidies to investors who cannot believe their luck.”
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