Onward Newsletter, 22/03/22

New research: Over the weekend we published our research note Renewed Importance, which sets out how the UK’s investment in renewables, supported by the Contracts for Difference scheme, is helping deliver lower energy costs for consumers and industry.

• The research was featured in The Sunday Times and Chris Skidmore, Chair of the Net Zero Support Group, cited our findings in an open letter to the Chancellor, calling for him to invest more in the future of energy efficiency
• Deputy Director Adam Hawksbee discussed the research from the note with Nick de Bois from TalkRadio on Sunday, on the 8pm segment from 04:57 – 19:00.

Elsewhere in the media:

Our report The Good Life continues to be covered in the media:

• Dean Russell MP wrote for Politics Home, exploring the importance of encouraging volunteering among young people
• Senior Researcher Luke Stanley wrote for Reaction, discussing research on fraying familial relations
• Researcher Jenevieve Treadwell wrote for Inside Housing, on the housing crisis and worsening social fabric, and how community land trusts offer a viable solution

Our work on devolution and levelling up was mentioned on Politics Home, in an article covering an interview with Andy Haldane, the Permanent Secretary to the Department for Levelling Up, Housing and Communities. 

The Independent cited findings from our report Another Brick in the Wall, citing the risk that a ‘NewKip’ party could pose to the Conservative majority.

Upcoming event

Join us on Wednesday at 5 pm for Budget Breakdown: Analysing the 2022 Spring Budget and financial forecasts. 

We will be hearing from Anthony Browne MP, Chair of the Backbench Treasury Committee, Shevaun Haviland, Director General of the British Chamber of Commerce, and Anna Isaac, the Economics Editor for the Independent. The panel will be chaired by Tim Pitt, Partner at Flint Global and Onward Fellow. Please head to our website to sign up.

Onward Note:

There has never been a better time to double down on investment in renewable energy. This was the key finding of our new research note, ‘Renewed Importance’, which we published over the weekend ahead of the Government’s forthcoming Energy Security Strategy. 

Our findings rebuff the arguments made by those skeptical of the net zero agenda. Many – like the Net Zero Scrutiny Group – have suggested that ‘green levies’ on energy bills, used to fund renewable energy projects, are contributing to the current energy price crisis and should be abolished.

Instead, the research shows that past investment in renewable energy projects through the ‘Contracts for Difference’ (CfDs) scheme is in fact now paying dividends for consumers. CfDs guarantee renewable electricity generators a fixed ‘strike price’ for the electricity they generate. When the market price of electricity is lower than the strike price, generators receive a top-up for the difference. But, when the market price exceeds the strike price, generators must pay back the difference.

This is why CfDs are now proving so valuable. Since energy prices surged, CfDs have paid back £114 million to energy suppliers. If this rate is maintained, households stand to save an average of £6.46 a year on their energy bills as a result.

But this is just the beginning. Over the next five years, an additional 21 GW of CfD-supported renewables will come online – at much lower strike prices than those agreed in the contracts for projects already operational. 

As a result, the savings will only grow. If the market price for electricity remains at around £170/MWh, then by 2027 CfDs will be paying back £10.5 billion a year. If these savings are passed on to customers, then the average household will save £97.53 a year as a result. If electricity prices increase, CfDs will pay back more too – helping to insure consumers against any further price spikes.

The Government has also stated its intention to reduce our reliance on imports of foreign gas, at a time of unprecedented energy security – especially in light of Russia’s invasion of Ukraine. 

Renewables are already a leading light in this process. Last year they displaced £6.1 billion worth of gas from UK energy markets, knocking off 17% from our total gas demand. 

As ministers seek to dampen soaring energy costs and secure the UK’s energy supply for years to come, it is vital that they disregard the skeptics and look at the facts: renewables are an efficient and cost-effective solution.

Alex Luke, Senior Researcher for the Getting to Zero research programme at Onward

Policy Bites

The Home Office has launched the fourth round of the Safer Streets Fund of £150 million, accessible to police and crime commissioners, local authorities, and civil society organisations to drive down crime and improve public safety. Link

The English Cities Fund, a joint venture between Homes England and Muse Developments has announced funding for 6,600 new homes and 2 million sq ft of innovation and commercial space in high priority Levelling Up areas. Link

The Chancellor has announced a cross-Whitehall crackdown on wasteful spending, expected to cut £5.5 billion of wasteful spending that will be redirected towards funding essential public services. Link