We have been told by politicians and governments for many years that renewable energy and electrification of transport will provide us all with ‘cheap’ power?

The transition to renewable energy will provide many advantages and improvements in our lives and technology – however, this transition will not necessarily be cheap in the short term which will probably require the consumer price of electricity to increase steadily up to and during this transition.

In the UK for example, the current tax on domestic vehicle fuel is close to 50% which means that with a pump price of £1.50 the tax element is around £0.75. With UK domestic fuel consumption around 48 billion litres/annum – this equates to a tax revenue of around £24 Billion. If this tax was transferred over to the domestic electricity tariff which it probably will be – then this will add around £0.33 per kw/h of electricity which at current prices would go from around £0.40 to £0.73 per kw/h?

Obviously, such a transition will be spread over time – however, there is also the question of the new electricity infrastructure required to produce and deliver this additional future demand? This is less easily calculated – however, a reasonable estimate would be around £100 billion/annum over 10 years. If this was transferred to the electricity tariff it would therefore add an additional £0.92 per kw/h. This would then bring the price of electricity up to around £1.65 kw/h?

All these costs as part of the transition will ultimately be good value for money and will offset other costs and taxes on conventional fuels etc – however, whilst it may be possible for governments to transition these taxes and costs into other areas of taxation would not be popular and in many ways damaging – as it then just removes the real cost away from the source which simply distorts the market and sector and we all just pay for it another way?

My opinion is that we will all start to see the cost of the energy transition translate into our electricity bills in the near future and so my suggestion would be to consider if and how your power use can be further reduced or supplemented with renewable technologies to be aware and ahead of these increases.

Here at Water Powered Technologies – we seek to make the most of water and renewable energy sources to assist in providing cost effective, long term and money saving solutions and are always pleased to assist customers in achieving this.

Phil Selwyn CEO/Founder Water Powered Technologies     26/10/23