The great energy myth

Posted on 22 Jul 2013
Oyster wave energy converter in operation

A new report from RWE npower bemoans the lack of transparency between government, industry and consumers, but there is an opportunity to work with the public more, says Marc Sobbohi.

Energy explained is a ‘truth via the facts’ report released by RWE npower last week. However the doubt remains whether this report will help allay fears for the future of energy.

So what is the scam with energy and why is there a lack of trust in energy companies and the Government?

Here is a ‘Big Six’ energy company telling the UK that energy prices will rise and the public will have to be willing to invest in clean energy for the future.

No saints

It’s a candid approach using some brutal honesty to recognise a problem well known by all those involved in industry as well as government.

Wind turbines
Npower predicts that support for green technologies will add an extra £82 to the average energy bill by 2020

The report is unique in its approach, for any company. It tells consumers that the wool is being pulled over their eyes. Not too many industry leaders do this.

This is an all guns blazing, fact show that lays down the gauntlet to industry and government, opening up their predictions (even the ugly ones) to the paying public.

Npower predicts that the average fuel bill will increase by £240 on current levels to about £1,487 a year by 2020. Of that increase, £82 is expected to come from support for green technologies.

It’s certainly hard to see RWE npower as saints. This is more likely to be seen as a creative attempt to restore confidence in the company. It is not corporate altruism by any stretch.

However, regardless of the intent, the report does hit on a widely accepted point that needs addressing. There’s no trust left in energy.

Absence of trust

This is a major concern. A lack of trust is damning at a time when the outlook for the future of energy is genuinely bleak. It’s quite unlikely that the Government will allow the lights to go out, just look at Edward Heath, but that does not mean there are continual problems on the horizon.

The state has to face the consequences of not acting earlier and now the amount of investment will need to come in bulk, the reality is the Government has left itself no option.

The key sticking point here is money. The fear from all at the centre of our energy stocks is that the people are not willing to invest in green energy infrastructure, which means paying now and waiting for the results. Do the Government and industry really believe that consumers are not willing to invest in future generations?

This is an instinctive measure from government and business. To spin, to portray a positive image. The Government clearly won’t want to hike up energy prices and rock the boat before an election.

However the walls are coming down. There are some very loud voices shouting for the truth, there is an outcry for transparency because this is too serious a problem to manipulate.

The Government looks to be doing a good job of investing on the surface, but the shine wears as you begin to scratch. Early set strike prices, investment in wind, £100bn investment in energy structure and a number of renewable energy projects and research are positive steps.

The truth is that these measures are very specific in the way they reward the implementation of renewable energy structure and the UK has the furthest way to go of any country in meeting EU 2020 measures, despite having an expectation less than the overall 20%.

RWE npower's predictions for trend of costs

Though npower do state in their report that it is “not intended as a critique of Government policy”, it makes a statement in its content.

The trend of increasing costs for energy from 2007-2020 are put forward as follows:

  • Policy and regulation – 339%
  • Energy transportation – 124%
  • Supplier – 30%
  • Commodity and production – 0%

The trends all seem to show that government policy and regulation will add cost to the energy sector and will not incentivise it, rather there will be grand investments in areas it sees fit.

All parts of the equation

It has to be said we all need to play our part. Both government and industry realise consumption must be reduced. They are relying on consumers to be more careful with energy. Even a 5% reduction across the board would save a mass amount of cost and resource.

This means all parts of the equation need to work together and that requires a clarity and a transparency that remains severely lacking.

“The disparity between perception and reality is very concerning, and something that needs to be urgently addressed.”Paul Massara, RWE npower CEO

The Government gave a mixed reponse on npower’s stance, though the clear message was that blame lies with rising gas prices.

Climate change minister, Greg Barker, said: “Global gas prices not green policies have been primarily pushing up energy bills.”

Whilst energy and climate secretary Ed Davey completely rejected npower’s figures saying, “Npower has got it wrong historically, we think they are wrong now”.

Clearly money is at the heart of the issue. Whether you see the Government as utilising energy as a means to meet regulation or you see big energy companies driving a costly market, the price of the whole thing is driving selective release of information.

More than willing

Here’s the thing that blows a lot of the talk out the water.

The UK Energy Research Centre (UKERC) has compiled a comprehensive report on public values and perception of the UK energy system.

Within the report a poll of around 2,500 participants found the public were very willing to invest in clean and reliable energy.

Professor Nick Pidgeon, who led the research team, said: “Our participants saw the bigger picture of energy system transformation, and they were overwhelmingly committed to moving away from fossil fuels towards renewable forms of energy production, and to lowering energy demand”.

Here are a selection of the facts:

  • 79% believe the UK should reduce its use of fossil fuels
  • 81% of respondents want to reduce their energy use.
  • 53% of respondents indicate willingness to use electric vehicles. This is higher (75%) if performance matches that of conventional models.
  • 22% are not willing to share their smart meter data with their electricity supplier.
  • 82% of the British public have strong concerns about the UK becoming too dependent on energy from other countries. Respondents were also concerned about having no alternatives in place when fossil fuels run out (84%), and the possibility of a national petrol shortage (73%) and frequent power cuts (63%).
  • 74% of respondents are very or fairly concerned about climate change.
  • 78% of respondents are fairly or very concerned that petrol will become unaffordable for them within the next 10-20 years.
  • 54% of respondents think National Government(s) are mainly responsible for ensuring appropriate changes are made to the UK energy system over the next 40 years.

Any actual or underlying belief that the public is not willing to invest in clean and sustainable energy is a myth that needs dispelling.

Conversely, the truth that consumers are clearly willing to invest in renewable energy infrastructure is something that must be worked towards, by all corners, and fast.