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The £200 billion energy investment fantasy

31 Aug 2011

Dan Lewis, Chief Executive of Future Energy Strategies and the Economic Policy Centre, sets out why the UK simply can’t spend £200bn on its energy infrastructure by 2020. Key points: Analysis by Ofgem in 2009 of the UK’s energy prospects drew up four illustrative scenarios. One of these scenarios, ‘Green Transition’, put the costs of delivering secure energy supplies and meeting carbon targets at almost £200bn.

The £200bn figure has subsequently been widely cited. But the Green Transition scenario is undeliverable. The underpinning assumptions are not valid, the major utility companies and the National Grid can’t afford it, consumers won’t have it, and the system in all likelihood would not cope.

A new approach is needed. This article puts forward a lower cost ‘Plan B’ based on the acknowledgement of some basic facts. The longer it takes for policymakers to accept that the £200bn investment will not happen, the more expensive it will be to change direction. There will have to be a renegotiation of the EU’s 2020 target for renewable energy and an extended life for the UK’s existing coal plants. Quite the worst of all worlds would be to keep pretending everything is going to plan.

Read the report here

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