Fuel bills could rise by £250 per annum to pay for switch to renewables

Energy bills could rise by as much as £250 in the next decade, the Government admitted, under plans to tackle climate change.

By Louise Gray, Environment Correspondent Published: 7:33PM BST 15 Jul 2009

Ed Miliband, the Energy and Climate Change Secretary, set out a raft of measures to cut greenhouse gases by more than a third by 2020.
Most of the cuts will have to come from the energy industry as it switches from fossil fuels like coal and gas to renewables like wind and solar.

This will mean a £100 billion investment in building the new infrastructure and most of the cost is likely to be passed onto the consumer by energy companies.
The Renewable Energy Strategy released on Wednesday set out how the Government will boost the amount of power coming from renewables from 2 per cent to 15 per cent by 2020.
The document estimated that it could cost households as much as £250 per year, while energy experts estimated bills could rise by up to £500 every year.
Mr Miliband insisted there will be no cost before 2015. Even when bills do begin to rise he said the annual cost would be closer to £77 because households will be using much less energy as a result of new efficiency measures.
But the Tories acccused ministers of "hiding the truth", while energy campaigners voiced concern for vulnerable households.
Launching the new strategy, Mr Miliband said the cost of switching to renewables would be compensated for by households taking up voluntary energy saving measures.
For example 7 million households are expected to take advantage of "green loans" in order to improve insulation and heating.
Home appliances like televisions are becoming more efficient, most people will be using energy saving lightbulbs and energy companies are obliged to help households fit insulation and double glazing.
Some 1.5 million homes will be given loans to set up their own tiny renewable energy schemes like putting solar panels or wind turbines on the roof in order to generate their own electricity.
Mr Miliband said failing to switch to renewables would ultimately cost more as the cost of fossil fuels increases. He also said there will be a cost to the countryside through climate change and less energy security.
"There are costs as a result of the Renewable Energy Strategy but there are also gains," he added.
Greg Clark, the Tory energy spokesman, said: "They [the Government] say we need to be candid about the facts but this is not being candid.
"This is hiding the truth. I think it is very likely that households will end up paying more than £77 and it is because the Government has failed over a 10-year period to take any steps to reduce our dependence on fossil fuels and increase energy efficiency. We are now in a hole and we are having to pay dearly to get out of it."
Ian Parrett, an energy analyst at Inenco, said: "The six per cent increase in energy bills, that the Government predicted for 2020, is based on the balance between increased energy prices and expected improvements in efficiency.
"We know that to support the scale of investment required in low carbon energy, companies will have to increase prices. The issue here though, is that those homes and businesses that have already taken efficiency measures will see greater increases in their bills without benefiting from additional support to reduce consumption.
"There are already fears that this increase could be as much as 50 per cent."
Garry Felgate, chief executive of the Energy Retail Association, also called on the Government to be honest.
"Increased investment in clean energy and domestic energy efficiency will have cost implications for all customers," he said. "We encourage the Government to be candid about the increase in costs to customers. While some people are struggling to pay their bills, we must be mindful of the increased costs these customers will face, over and above the cost of the energy they use."
Jonathan Stearn, energy expert for Consumer Focus, said the poorest households must be better protected to prevent hundreds of thousands more being pushed into fuel poverty.