Evan Davis Propagated Lies On Net Zero

Richard Tice is right, renewable electricity is expensive. BBC Verify are lying, incompetent or both.

Dear Mr Davis,

On your radio show PM on Monday you discussed Richard Tice’s statement that renewable electricity is expensive. Your chosen expert – a term I use loosely – was Ben Chu from BBC Verify. (Mr Chu is a historian turned economist and journalist).

He correctly explained that the cost of renewables is set in the annual Allocation Rounds (AR), which defines the strike price for electricity from the various generating technologies. He correctly stated that in last year’s round, AR6, the strike price was £60 per megawatt hour (MWh). He went on to say, correctly, that the current wholesale price was some £75 per MWh. He incorrectly concluded that the wind companies were paying the government £15 per MWh under their contracts for difference (CfD) and that Richard Tice was wrong.

What Mr Chu didn’t tell you was that the £60 figure he quoted was in 2012 pounds. The AR6 strike price is actually £102 today. Mr Chu should know that the CfD strike price is adjusted for inflation. If he doesn’t he’s no expert; if he does he lied to you. Either way, The strike price of £102/MWh is greater than the £75/MWh current wholesale price quoted by Mr Chu. #the reality is that the wind companies are receiving £27/MWh of subsidy on top of the wholesale price. Renewable electricity is more expensive than wholesale electricity. Richard Tice is correct. Mr Chu and BBC Verify are wrong. Again.

The discussion went on to discuss the need for “some” storage (be it hydroelectric or batteries) to provide electricity on the days when the wind doesn’t blow and the sun doesn’t shine. It didn’t cover what else goes into the exorbitant cost of British electricity. Nor did it discuss why the UK has some of the most expensive electricity in the world.

Allow me.

For a start, on top of the CfD subsidy wind generators receive “curtailment payments” when the wind is blowing, their turbines could be generating but there is no demand. In 2024 those payments cost some £1 billion. More than 10% of wind generation was covered by distraint payments in 2024. The total cost comes out at £197 per MWh and puts around £14 per household on (price capped) domestic electricity bills. Industry pays rather more.

Then there is the matter of stand by power, provided by gas fired power stations. The spectre of curtailment payments more than twice the strike price means wind is generally the preferred generator, so gas fired power stations are used less. Maintenance and non-fuel costs of the power station are therefore spread over fewer MWh, meaning the cost of gas generated electricity rises.

The net result of this balancing of supply and demand is some £7 billion per year, up 55% since 2021. That’s another £22 per MWh. Some of that expensive electricity comes through the European interconnectors, of which we currently have about 10 Gigawatts (GW) - equivalent to three Sizewell Cs. The government is throwing your)money at this, hoping to have 18GW of interconnector capacity by 2030.

The UK’s peak demand is around 60GW. If the wind isn’t blowing the UK’s supply is very close to demand. The interconnectors can’t cover the shortfall. We narrowly missed a blackout in January.

If, as is often the case, the wind isn’t blowing across all northern Europe interconnector electricity can get very pricey indeed. It once hit almost £10,000 per MWh. such is the importance of electricity and the paucity of supply on still days. Relying on renewable electricity is expensive and reckless.

Nor did Mr Chu mention that Orsted (a large Danish windfarm operator) had pulled out of its AR6 Hornsea 4 project, taking with it 25% of the proposed generation of the entire allocation round. It cited various reasons; the short version is Orsted considers the strike price is too low.

It’s not only Orsted. Vattenfall (a large Swedish energy company) ended development of the Boreas wind farm for similar reasons. BP, once set on becoming “Beyond Petroleum” and a major wind operator, has just moved out of renewables all together, to the delight of their shareholders.

Why are these leading companies leaving the UK wind sector? Because they can’t make a profit – to do so they need an even higher strike price which will make renewable electricity even more expensive. The AR7 strike price for offshore wind is £113/MWh, up 11% in a year.

The wholesale price of electricity (that is, the price paid to the generator) is less than half the total consumer price. Around a fifth of the consumer price covers the network and distribution costs. The drive for net zero generation is adding to these substantially too. Green generation requires lots of small generators to be connected to a grid that was originally designed for a few big generators. That translates into thousands of miles of wires, pylons, transformers and other electrical gubbins, all of which the consumer must pay for, making renewable electricity even more expensive.

The overall net zero plan makes it worse. Households will need more electricity than many were designed for to charge cars and run heat pumps. That means rewiring every street. The network operator is cagey about the overall price of building the network required to keep the lights on in net zero Britain, but it runs into trillions of pounds. Even the wildly optimist Climate Change Committee puts the cost at £50 billion a year for 25 years, a total some £1,250 billion (or £1.25 trillion). Back in 2020 National Grid, who know a bit about electricity, estimated the cost at £3 trillion. All that cost will have to be recovered from electricity bills and all of it is entirely attributable to Net Zero.

A ”clean” electricity grid needs significant storage to match supply and demand. Dunkelflaute, periods of no wind and high demand, last up to two weeks every other year. A green grid must therefore store enough electricity to cover that.

According to the government DUKES data set in 2023 (the latest figures available) all the grid scale batteries in the UK had a combined storage of 6,900MWh. That might sound a lot but average UK electricity demand is some 737,000 MWh. There is enough battery storage to run the UK for 13 minutes (assuming they were all charged). To provide electricity for a fortnight would require some 1,200 times as much battery storage as we currently have. At today’s prices that would cost about £2 trillion, excluding wiring, maintenance and the like.

Hydroelectric pumped storage is even more expensive. The Dinorwig hydroelectric power station stores about 9,100 MWh. It cost £500 million in 1984, equivalent to £2 billion today. A fortnight’s electricity it comes out at 1,200 Dinorwigs, so £2.4 trillion. The UK hasn’t built a dam for 30 years, so that might be optimistic.

This estimate is based on today’s electricity consumption, which is only about 20% of all UK energy consumption. When (or if) we get to net zero and run transport and heating on electricity too UK electricity demand will have trebled. That’s another £4 trillion. Assume a (generous) 50 year life, and paying off the capital comes out at £120 billion a year. On current annual consumption that’s an extra £380 per MWh. A fully implemented Net Zero will quadruple the AR6 strike price for electricity.

In the light of the evidence above I’m sure you will agree that Richard Tice and Reform UK are correct – Net Zero makes electricity unaffordable.

Perhaps you could tell Mr Chu and the rest of BBC Verify.

Best Regards,

View From My Cab

PS We haven’t’ yet considered grid stability or the price of copper, both of which are a major concern for a “clean grid.”

PPS. If you want to understand the challenges of net zero read my book. Give a copy to Mr Chu.

---

If you enjoyed this article please remember that Views From My Cab is a reader-supported publication and subscribe, which costs nothing but makes the Substack bots more generous.

Or you could make a small, one off donation to defray the production costs I would be hugely grateful. The simplest method is via Buy Me a Coffee.