Government’s solar power focus is unlikely to result in lower bills
Billions of pounds of taxpayers’ money will be poured into solar energy and other similar projects
ALICIA G MONEDERO/GETTY IMAGES
Making election promises pegged to exact cost savings is never a wise idea, as Ed Miliband is discovering. Labour’s pledge to slash £300 off energy bills by the end of the parliament is one that the energy secretary is likely to rue as it appears increasingly hard to fulfil. So much so that a recent major policy document from Mr Miliband’s ministry did not contain the pledge. Out of desperation to make some progress on hitting this target, the last budget slashed the very green levies which he championed on energy bills.
Now, Mr Miliband is pinning his bill-reducing hopes on solar energy. As this newspaper reports, the government will announce proposals in the new year to ramp up the use of solar panels. Some £15 billion will be allocated to the warm homes fund, offering grants and subsidies over the next four years to cut carbon emissions from British homes. Billions of pounds of taxpayers’ money will be poured into solar energy, heat pumps and batteries. Red tape will also be cut to help install cheaper plug-in panels on properties.
The emphasis on boosting solar to reduce bills is a notable shift from Mr Miliband. Until now, the warm homes agenda was focused on improving insulation and installing double-glazed windows to make homes more efficient. But, despite warnings that Britain’s ageing housing stock makes this costly and time-consuming, the government pushed ahead — only seemingly to conclude it was not an effective use of money. The energy secretary will need to explain why his second warm homes strategy will work better than his first.
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The aspiration of this new policy is to help households become “zero bill”, which means paying little or no money for power as it will be self-generated. According to an analysis by Octopus Energy, as many as a million homes could achieve this if they pay for solar panels, heat pumps and batteries to be installed. For others, Mr Miliband hopes for a significant reduction in their bills. Although details of the plan are as yet unknown, it is likely that poorer homes will receive more assistance from the government.
There may be merit in encouraging more homes to go solar, particularly as the costs reduce, but there is a question of whether such large subsidies are an effective use of government funds. There are significant questions about how these monies will be doled out: will it be automatic, or will it need to be reclaimed from Whitehall? If there is too much red tape involved, homeowners may opt not to bother. Households will need convincing that it is an effective use of their cash to invest in solar, battery and heat pump kit at a time when the technology is still evolving.
Ministers are right to be focused on reducing energy costs. The UK has the second most expensive bills for household energy in the developed world — double that of the United States — while its industrial energy costs are the highest anywhere. Reducing both of these requires a much greater focus on producing more so-called baseload capacity that is not based on renewables. Solar is an important part of the UK’s energy mix, but so too is nuclear. After some dithering, it was welcome that the Starmer government accepted the recommendations of the recent Fingleton review on building nuclear stations faster and cheaper. Now it needs to be put into action. This should be ministers’ top priority, rather than asking taxpayers to once again finance vast state subsidies.