The price of electricity will double in the next five years!


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Well, that’s what some bloke told me down the pub last night. He believes that within five years all the solar power, wind power etc… will add so many additional costs to the system that a unit of electricity will cost in excess of 25p.

I will admit that my thought process is quite different but it got me to thinking and so I checked out on Google whether there was any truth in this forecast. I couldn’t find one, but I did find a report from the Library at the House of Commons (Standard Note: SN/SG/4153) dated 8th March 2013 and it’s opening sentence states “The price of domestic gas and electricity has generally increased over the past eight years after around a decade of falling prices. The cost of heating oil has increased by a larger amount.”

In one of the tables at the back (in section 3) it gives the “Fuel price components of the RPI” and in January 1987 the indices of each commodity started at 100 – 10 years ago in January 2003 electricity was standing at 74.1, gas at 72.2 and oil at 79.6.

Gas has been recognised as being the cheapest and most popular form of heating solution for most homes and proving in inflation terms that it remains so!

By January of this year though electricity was standing at 114.8, an increase of 55% over 10 years. Gas had increased to 152.1, an even bigger increase of 114.5% and oil up to 203.3 an even bigger increase of 155%.

So, in 10 years the price of electricity is increasing much slower than oil & gas!

Going forward, the same report states “Real increases in typical gas bills to 2020 are forecast to be 12%, while real electricity bills are forecast to be 8% lower than in 2011. In 2020 the full range of policies is projected to add 1% to a typical gas bill (compared to a situation with no policy) and cut electricity bills by 16%” This last statement was from a report entitled “Estimated impacts of energy and climate change policies on energy prices and bills” – DECC in November 2011.

So, in my opinion the price of electricity won’t double and many people will want to have electricity as the power source of choice in providing their heating & energy solutions!

Nice to know that the bloke in the pub is hopefully wrong :-)