Britain’s free-market ‘energy experiment’ hasn’t worked, shows WhichGreen figures

25 February 2010

• Renewables could help close energy gap if minimum £30/year threshold was met

• Ofgem prediction of energy crisis in 2020 is well founded

• Solution for Big Six energy firms is to put ‘people before profits’ for 10 years

Britain’s free-market energy industry is failing to serve Britain’s needs and should be overhauled, as demonstrated by the annual WhichGreen figures from energy company Ecotricity.

In response, it is calling on all of Britain’s energy companies to agree to put ‘people before profits’ for 10 years to deliver the investment required to meet 2020 targets.

The figures show that all of Britain’s ‘Big Six’ energy companies have failed over the last six years to spend the minimum £30 per customer per year needed to keep pace with the government’s legally binding targets for renewable energy, to create a reliable, indigenous energy system in the UK powered by 15% renewable energy by 2020.

An annual investment of around £30 per customer, per year is needed to keep pace with the government’s legally binding renewable target which grows at 1% each year. It stands at 10% in 2010 while the actual amount of renewables is around half that, at 5%. This target will continue to grow 1% year-on-year until 2020 to help slow the rate of damaging climate change.

Dale Vince, founder and MD of Ecotricity, said:
“WhichGreen figures show that for the sixth year running, the Big Six energy companies in Britain haven’t even come close to meeting their minimum legal obligation to build more new sources of green energy. As a country we’re behind and falling further back all the time.

“New sources of Renewables are essential for us to solve the twin problems Britain faces: the need to tackle climate change and the need to secure energy independence for Britain. Even Ofgem has now highlighted this as a major problem.

“The Big Six suppliers are in an oligopoly, they are simply not as interested in investing in Britain’s long-term future as they are in short-term profits for shareholders. That’s something that needs to change, and quickly. We’re calling on the Big Six adopt our business model for the next 10 years, forgo dividend payments and spend the money instead on the new clean energy sources Britain needs.”

Ecotricity works on a ‘not-for-dividend’ model, where money from bills goes back into building new sources of green energy and not to shareholders. In 15 years, Ecotricity has built and now operates 51 windmills at 15 wind parks across the UK, generating 52MW of electricity, 11% of England’s wind electricity supply.

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Methodology – WhichGreen figures are calculated annually by Ecotricity based on publicly available figures from Ofgem, BWEA and energy suppliers, and is sent to suppliers for verification. The £ per Customer is based on each supplier's total expenditure on building new renewable energy capacity in 2009 divided by the average number of customers in 2009.

Expenditure was sourced from suppliers or calculated based upon the Ofgem commission date for each renewable generator with a capacity of over 50 kW in 2009 and multiplied by the average investment expenditure per MWh for that form of renewable generation (Source: Ofgem; BWEA; Enviros 2005). For full details, visit the Whichgreen Method.

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British Gas has challenged our 2010 WhichGreen figures. It all centred around their offshore site (Lyn and Inner Dowsing) which we credited them with in full in 2008. BG’s point was that some of it went live in 2009 and so some of the cost was in 2009 as well.

Two things worth noting here are that we use Ofgem data for when new capacity comes on stream (we don’t make it up), and every year we send the numbers we propose to publish to every company and invite their corrections. In 2008 BG was happy to take the full credit for this big offshore project – they didn’t correct us then.

Anyway we said fair enough, give us the spending split between 2008 and 2009 and we’ll use your own numbers (and correct the figures for 08). Guess what? They refused. So we’re left with the publicly available data.