Renewable industry slams flawed KPMG energy report

Gas prices have driven fuel bills up, not renewables · Wind costs make up less than 1% of average household fuel bills · Only two new nuclear plants at most likely to be operational by 2020 · KPMG report fails to consider the whole cost of new power plants

RenewableUK, the country's largest renewable energy trade association, has strongly criticised the flawed energy report "Thinking About The Affordable" due to be published by the accountants KPMG on Tuesday. The report incorrectly claims that Britain can meet its 2020 carbon reduction targets by building nuclear and gas-fired power stations. It also states, misleadingly, that this would be cheaper than relying on renewable energy sources such as wind.

Central to the report authors claims is the assumption that a large proportion of the new generation of nuclear plants can be deployed quickly during the coming decade despite industry expectations of drawn out technical and planning approval processes. Few industry analysts believe that more than two new nuclear power stations will be operating before the end of the decade. However, a failure to deliver the level of nuclear power assumed in the KPMG report would leave us dangerously over-reliant on imported fossil fuels, during a decade in which a quarter of the UK's existing power stations will have to be permanently decommissioned.

RenewableUK Communications Director Charles Anglin said: "The recent rises in electricity bills have been caused by the global increase in the price of gas, not by renewables. DECC's own Annual Report on Fuel Poverty, clearly states that between 2004 and 2009, "domestic electricity prices increased by over 75%, while gas prices increased by over 122% over the same period", while the cost of generating electricity from wind, according to Ofgem, is less than £10 per year per household, or less than 1% of the average household fuel bill. So relying heavily on gas will not drive fuel bills down in the future."

The most authoritative study on the impact of renewable energy on domestic bills was carried out by the Government's official energy regulator Ofgem. Its Project Discovery research, which examined the impact on prices for a range of scenarios for different UK energy mixes up to 2020, shows that if Britain fails to invest in renewable energy, electricity bills will be pushed up by 52% because of the volatility of fossil fuel prices.

The KPMG report focuses solely on the upfront costs of building new power plants, ignoring other lifecycle costs, such as fuel and decommissioning. In comparing the costs of the various technologies, the report appears to deliberately fail to take into account the low operating costs of wind, which counterbalance the high capital and construction cost. In Germany, Denmark and Spain, three European countries with a high level of wind power deployment, the low operational cost of wind means that it is the first choice of power source used to meet demand, displacing more expensive options, and thereby actually reducing rather than increasing electricity prices.

The report states that wind farms only generate electricity for about one-third of the time. This is factually incorrect. Wind turbines in fact generate electricity for 80-85% of the time. They generate the maximum possible amount at full speed for about one-third of the time. KPMG appear to have confused these two concepts, leading to a basic error which does not inspire confidence in the rest of their research.

The report also appears to downplay the wider economic benefits offered by the development of a UK based manufacturing sector for offshore wind. Anglin, added

"Those countries who previously embraced wind energy have reaped the rewards in terms of job creation. In Germany 80,000 people are employed in the wind energy sector, in contrast in the UK which missed its opportunities with onshore wind in the 1990s. Our wind industry currently employs just 10,600. RenewableUK's report "Working for a Green Britain" shows how this will could be increased to almost 90,000 people by 2020, but only if the Government recommits to offshore wind and meeting the 2020 renewable energy targets ".

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