Last week, photographs of wind turbines were once again juxtaposed with headlines about rising energy prices. The cause on this occasion was no less pre-eminent a body than a Lords committee, comprising former chancellor Norman Lamont and other heavyweight peers.
“To reduce carbon emissions, governments have subsidised renewables, passing on the cost to consumers in their electricity bills. The average domestic electricity bill was 58% higher in 2016 than it was in 2003,” the economic affairs committee said in its report on energy policy.
Anyone reading it would have been forgiven for directing their anger at windfarms when increases in their energy bills land, as half of the big six energy suppliers are planning.
Yet the peers’ report admits that “rising international prices for fossil fuels” were the main driver for energy bills going up over the period. Renewable energy subsidies on bills – the “green crap”, as former PM David Cameron reportedly called them – do add a cost. But it’s small, at 10% of an average dual-fuel bill, as the peers themselves note.
The blame for the latest round of price rises announced by energy suppliers, big and small, does not lie primarily with wind turbines and solar panels. Energy regulator Ofgem was clear about that in front of MPs last week and in its analysis last month.
Even First Utility, one of the so-called challenger suppliers meant to be bringing down prices, said on Friday it was raising annual bills by £105.60 for 117,000 of its 900,000 customers from 1 April. Wholesale electricity and gas prices were up 42% year on year, it said, while the cost of renewable subsidies was up 25%.
Yet there is no sign ministers want to get involved in the messy business of capping prices, which some are calling for. Theresa May and business secretary Greg Clark have both expressed concern for billpayers. But as Iain Conn, the chief executive of British Gas’s parent company, Centrica, said last week when his company reported a 4% rise in profits: “The government aren’t sure they need to intervene.”
So where does that leave efforts to protect householders and industry from rising energy bills? Policies to improve energy efficiency – the boring but important business of installing wall insulation and fitting new boilers to bring down bills – have been axed or left on a dusty shelf in Whitehall.
The government has no power to manage wholesale electricity and gas prices, inside or out of the EU. We are, as one energy industry chief said recently, “overexposed to global markets over which we have no control”.
Which leaves us with nuclear power and renewables as tools to insulate Britain from the whims of wholesale fossil fuel prices. Nuclear is good at providing a lot of power; Hinkley Point C and Moorside in Cumbria, two of the hoped-for arrivals in a fleet of new atomic plants, would alone provide some 14% of the UK’s electricity.
But new nuclear is not cheap and it is not guaranteed to happen. “Most of our witnesses disagreed that the [Hinkley] project provided value for money,” said the Lords economic affairs committee. Its chair, Lord Hollick, believes that the economic justifications for Moorside and Hinkley are hanging in the balance.
So we come back to the “green crap”. At some point the political narrative and public discourse needs to turn 180 degrees: from blaming renewables for rising energy prices to viewing renewables as our saviour from them.
The cost of solar power has dropped 80% in the last five years, according to the leading energy authority, the International Energy Agency. Even offshore wind, the priciest renewable source, has come down by a third in the past three years.
Yes, these things add costs to managing the power grid. But as an authoritative report found last week, they’ll be modest even if use of renewables such as wind and solar doubles from 15% today to 30%. Hopefully, by that point, the headline next to the windfarm photo will tell a different story.
Rightmove’s hold on internet house adverts looks rock solid
Everyone appears to be winning from the housing market apart from the people actually buying or renting a property. Bovis Homes last week announced that it was having to pay out £7m to customers who had moved into shoddy homes, but it still managed to increase revenues by 11% to more than £1bn.
However, it was Rightmove’s numbers that really caught the eye. The online property portal reported 2016 revenues up 15% to £220m – and pre-tax profits up nearly a fifth to £162m. That is a margin of 74%. By contrast, Tesco, Britain’s biggest retailer, made the same pre-tax profit last year – on sales of more than £48bn.
Extraordinarily, Britons spent nearly one billion minutes every month looking at property on the website last year. That is some 15 minutes per person, including large swaths of the population who are just dreaming – with no plan to buy or rent a house. Rightmove has built a hugely dominant position in the housing market. One million residential properties are now advertised on the site – a third more than any rival.
Its profit margin is unsurprising given what Rightmove actually does – it just runs a website used by estate agents to advertise the homes on their books. It is the equivalent of owning the only big shopping centre in Britain, where each shop pays rent and also pays for its own maintenance and security. Every shopper in the land visits the centre, because it has all the shops, and every shop wants to be there because everyone goes there.
Advertisers – mainly estate agents – paid an average of £842 per month last year to get on Rightmove. That was up 12% year-on-year. But, according to analysts at Hargreaves Lansdown, it is still a bargain for the agents – because it is a third of what they were paying a decade ago on local press advertising to get a fraction of the Rightmove audience.
Usually when margins are so high it is an open invitation for new competition to set up. But Rightmove is so entrenched it is currently hard to see what might dislodge it.