Edward Morello is the Liberal Democrat MP for West Dorset.
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It is a pleasure to serve under your chairship, Mr Western. I thank my hon. Friend the Member for Bath (Wera Hobhouse) for securing this important debate. I declare that prior to being elected, I spent the better part of a decade in renewable energy finance. While I would not claim to be an expert, I hope to bring some useful insights to this debate.
Between 2010 and 2021, the global average cost of electricity generated from a renewable energy source over its lifetime declined by 88% for solar, 68% for onshore wind and 60% for offshore wind. Yet, even as renewable energy has become drastically cheaper to generate, the wholesale cost of energy to consumers remains high. It is simply unacceptable that companies are making vast profits while households, particularly in rural areas, are struggling to afford the basic necessity of heating their home.
The Government could solve this problem by delinking fossil fuels and renewable energy pricing, as other countries do. Our wholesale energy price would then be the weighted average between the two, which would bring us on a par with the energy prices of other nations. Far more importantly, it would also reduce the cost to consumers. The Government must take decisive action to break the link between gas prices and electricity prices. The previous Government promised to review electricity market arrangements, and this current Government should do so. Creating a separate market for renewables and fossil-fuel generated electricity would make energy fairer and more affordable to consumers.
I will make one other appeal for action by this Government. It is a trope often repeated that we need to put more solar panels on roofs and car parks, rather than farmland. I do not disagree, but the trope fails to recognise that doing so is commercially unviable. If utility-scale solar—this is an oversimplification—costs 50p per unit to build, commercial rooftop is double that, and carports double that again. The value paid by energy companies for exported renewable energy is often as little as 5p or 5½ p per unit, so utility scale is the only solar that works as a pure export model. That unit of electricity is then sold under a green energy tariff to consumers at a vastly inflated price. The only people who benefit are the energy companies.
Again, the Government have a relatively straightforward fix at their disposal: mandating a minimum export value. Yes, energy wholesalers will make less money, but I can live with that. More importantly, it would unlock investment in rooftop and carport solar, end the competition between food production and net zero, and ultimately reduce costs for consumers. Those are easy wins for a Government who claim to be committed to fighting climate change. Instead of following the advice of industry, the Government have chosen to axe winter fuel payments, stripping vital support for many of the poorest pensioners at a time when energy bills remain high—a decision that should be reversed.
Full debate: Cost of Energy