Friday, 25 March 2011

UK carbon price floor to drive up electricity prices, warns consultancy

The level of the carbon price floor announced by the UK Treasury today is estimated to drive wholesale electricity prices up by ten per cent by 2020, a specialist energy consultancy has warned.

Although high carbon prices will come as welcome news to the renewable energy industry, they may also make the cost of buying green energy un-viable.

Redpoint Energy carried out support analysis for the UK Department of Energy and Climate Change (DECC) and the Treasury on a possible support for a carbon price.

The Carbon Price Support mechanism is expected to stimulate investment in low carbon generation, but is expected to be overridden by other subsidies.

Redpoint Energy director Duncan Sinclair said, ‘We estimate that wholesale electricity prices may be around £5-£6 MWh or ten per cent higher by 2020 given the levels of carbon price floor announced today.

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