Miliband’s ‘break the link’ plan is not a magic formula for lowering energy bills
It’s a holy grail of UK energy policy – de-linking gas and electricity prices.After all, we’ve been told endlessly that one reason why our energy bills are so high is because “gas sets the price of electricity”.And here it comes: “decisive action” from the government to “break the link”.So, tell us, by how much can we expect bills to fall?Energy secretary Ed Miliband and colleagues didn’t offer even a tentative answer.The big announcement was a prediction-free zone on bills for two reasons.
First, because the outcome won’t be clear until older wind and solar projects with legacy subsidies, the target of the reform, have been shuffled on to fixed-price contracts next year with a prod from the chancellor in the form of a higher rate of windfall tax if they stay on their current set-up,Second – and more pertinently – the absence of forecasts is surely because the savings for consumers probably won’t be much to shout about,The plan is a heavily diluted version of a more radical proposal known as “pot zero”,That one would have attempted a full-blown renegotiation of the legacy subsidy scheme known as the “renewables obligation” (RO), enjoyed by wind and solar farms commissioned before 2017,Under “pot zero”, projects would have been cajoled on to today’s fixed-price “contracts for difference,” or CfDs.
But the government’s intended “voluntary” idea is aiming only at a limited reset.Consider the economics of an older offshore windfarm that operates under the RO scheme.For its generation, it is paid about £130 a MW/h via RO plus the wholesale price for electricity, which has been about £70 in the past year.Call that £200 a MW/h in total – much higher than £91 at which the new offshore projects got post-2017 fixed-price CfDs in last year’s auction.A full-blown renegotiation of the RO model would offer a big win for consumers if the gap between £200 and £91 could somehow be closed.
But, critically, that is not the aim.Rather, the government said older renewables generators will continue to receive support via the RO “in the way they do now – with only their wholesale revenues being exchanged for a fixed-price CfD”.The wholesale element is the piece that can explode when the gas price spikes.So a switch to fixed prices will bring greater stability in periods such as now.In that sense, there is a “de-linking” gain.
But, if the variable rate of £70-ish under normal conditions only becomes, say, a fixed-rate of £50, the overall gain in bills for consumers will not be gamechanging.Maybe the haircuts will be bigger, but it’s not obvious why they would be.The RO scheme was necessarily generous to get the industry up and running in its early years.One can’t decry its existence, even if the rewards have been higher than original developers expected.But those generous subsidies only start to roll off from next year and will take a decade to disappear.
It is one reason why bills are so hard to shift.The projects still account for 30% of UK electricity generation.Here’s a rounded view of Tuesday’s plan from Callum MacIver of Strathclyde University, also a researcher for UK Energy Research Centre, which produced the more radical “pot zero” idea in 2022: “While the measures are very welcome, my personal view is that the near-term impact could be relatively modest.With good take-up, they have the potential to insulate electricity prices further from the impact of continued or future gas price shocks, which should be regarded as a win in its own right.“However, the failure to include the RO element feels like a potential missed opportunity for concrete bill reductions in the near term – particularly for businesses who didn’t benefit in the same way as households from the recent shift of 75% of RO costs from bills to general taxation.
”Yes, that’s fair: the government is really only putting in place protection against spikes by injecting more certainty on prices,To really move the dial on bills, somebody has to be paid less,In this case, it seems, the government fears bad signals to investors if it were to kill the expensive RO scheme before it expires naturally,The more important announcement in Tuesday’s long list may turn out to be the intention to accelerate the take-up of electric vehicles and heat pumps,That is necessary because, even as the UK has added wind and solar farms, the adoption of electric technology has been achingly slow.
As a trio of energy bosses put it this week, the government needs “a clear plan not just for how we produce energy, but how we use it too,”As for the North Sea, it was hard to tell what Miliband was trying to indicate,He said he doesn’t agree with those who would turn off the taps immediately or with those who would drill “every last drop”, a form of words that leaves a very wide range between producing nothing and producing everything,His real approach will only become clearer when he (eventually) makes a decision on whether to approve the Jackdaw gasfield and the Rosebank oilfield,Current best guess: the former looks more likely than the latter.
Lewis Moody ‘picking up baton’ left by Doddie Weir with MND fundraising cycle ride
The former England captain Lewis Moody has said he is “picking up the baton” left by Doddie Weir after announcing plans to lead a 500-mile, seven-day cycling challenge this summer to raise funds for the fight against motor neurone disease.Moody will be joined by many of his fellow 2003 World Cup winners, including Jonny Wilkinson, Mike Tindall and Ben Kay, as well as his teenage sons on a journey from Newcastle to the Allianz Stadium in Twickenham, with all proceeds going to the My Name’5 Doddie Foundation.The former Leicester, Bath and British & Irish Lions forward became the latest retired player to be diagnosed with MND, which he revealed last October, with the disease having claimed the lives of Weir and the former rugby league international Rob Burrow in the past four years.The My Name’5 Doddie Foundation has raised more than £23.5m to fund MND research, and Moody has committed to continuing the former Scotland international’s legacy in fighting a disease that results in six new diagnoses each day in the UK alone
South Africa struggling to secure UK TV deal to screen England Test series
Cricket South Africa has yet to secure a UK television rights deal for England’s marquee Test series next winter with Sky Sports declining an offer to renew a long-term contract that expired last year.Sky’s apparent reluctance to extend a relationship that began more than 30 years ago has left CSA searching for alternative broadcast partners so that the three Tests over Christmas and three one-day internationals in January are televised in the UK.The decision is all the more surprising as South Africa also hosts Australia in a three-Test series in October in a time zone that is convenient to British audiences, and reflects the dwindling value of bilateral international cricket.TNT Sports has made a habit of buying rights rejected by Sky in the past, including last winter’s Ashes and those for Test series in India and Pakistan, but are unable to commit at present due to budget pressures and uncertainty over its long-term ownership. Paramount Skydance has agreed a $110bn deal to buy parent company Warner Bros Discovery but it has yet to be approved by United States regulators, leaving TNT in a holding pattern
‘Tennis is about being fluid’: How Iga Swiatek is drawing on her time with Rafael Nadal to regain No 1 spot
Iga Swiatek had little interest in tennis as a teenager, but the one exception was Rafael Nadal. She spent her formative years idolising the Spaniard, who won 22 majors and, from afar, soon became one of his most avid students.His influence is evident in the heavy topspin the Pole generates with her forehand, still a singular weapon on the women’s tour, proof of the intensity she demands of herself on every point and her four French Open titles earned by the time she was barely 23.After a youth spent following Nadal’s career, Swiatek’s success allowed her to build a friendly rapport with him away from the court. Their friendship then came full circle this month as she found herself being coached by Nadal at his academy in Mallorca alongside her new full-time coach Francisco Roig, Nadal’s former coach of 18 years
‘Two are stronger than one’: Boston Marathon duo praised for helping struggling runner cross finish line
A pair of Boston Marathon runners who teamed up to help a fellow athlete across the race’s finish line have been praised for their “beautiful moment” of sportsmanship.Ajay Haridasse, a 21-year-old university student from Wakefield, Massachusetts, found himself stumbling after passing the 26-mile mark in Monday’s race. After falling for a fourth time, he was “getting ready to crawl” to the finish line, Haridasse told the Boston Herald.As he attempted to regain his strength, Aaron Beggs, a 40-year-old from Northern Ireland, appeared on his left side and pulled Haridasse to his feet. Haridasse stumbled again, only to be caught from behind by another runner, Robson De Oliveira, a 36-year-old of Brazil
London Marathon organisers believe two-day event could bring £400m economic boost
London Marathon organisers have revealed more details about plans to stage a two-day event next year which they say would be an “incredible celebration” that would raise more than £130m for charity and bring in £400m in social and economic benefits.As the Guardian revealed last month, advanced talks are under way for the one-off event which would allow around 100,000 people to take part, nearly double the number running on Sunday.Speaking on Wednesday, Hugh Brasher, the event director, confirmed that one of the two days would be devoted to faster women, with the women’s elite race, women’s championship and good-for-age runners and a mixed mass participation race all taking place. The other day would then focus more on the men’s races while also having a second mass participation race for men and women.Brasher also promised those still holding up the deal that 2027 would be a one-off “double” as the London Marathon did not want to “lose the love” it has from runners, fans and people living in the capital
Ryder Cup tickets hit record Europe high at £434 a day in Ireland next year
Ryder Cup Europe has doubled the cost of a ticket to attend next year’s marquee event when the US will seek to regain the trophy at Adare Manor in County Limerick.Organisers will charge fans €499 (£434) for a daily ticket when a batch are released to those living in Ireland, where the centenary event is being held, on Friday. That is almost double the €260 face value spectators paid in Rome three years ago.Practice-day covers will be more reasonably priced at €89 for adults and €20 for children for the Tuesday and Wednesday sessions, rising to €179 and €30 for Thursday, which includes the opening ceremony.Despite the prices being at record levels for European-hosted Ryder Cup, fans paid $750 (£555) to watch Europe’s victory over the US at Bethpage in New York last year
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