British Gas boss in shock admission over electricity prices
Chris O'Shea, chief executive of owner Centrica, has spoken honestly of what he sees as the real benefit of moving to net zero energy such as wind and solar
British Gas boss Chris O'Shea has delivered a stark message about the pursuit of a net zero power grid - warning it isn't the golden ticket to slashing electricity bills. Chris O'Shea, chief executive at Centrica - British Gas's parent firm - said: "The shift to renewable power will NOT materially reduce UK electricity prices from current levels."
Taking to LinkedIn to express his thoughts, O'Shea stressed that the move towards net zero energy sources like wind and solar is more about delivering price stability and safeguarding against future price shocks than cutting household energy bills. "They may give price stability and avoid future price spikes based on the international gas market, but they will definitely not reduce the price," he noted in his post.
This assertion puts him out of step with other energy leaders such as Octopus head Greg Jackson and Dale Vince of Ecotricity, not to mention Energy Secretary Ed Miliband. His remarks are at odds with claims made by the Government that shifting to greener energy would be a win for lowering family expenses.
His comments come despite British Gas rolling out deals with cheap or even free electricity for certain customers during periods of excess wind and solar generation. In his warning, O'Shea explained that although the cheapest green technologies can compete with gas on price, others, like floating wind and tidal power, could set consumers back by up to three times as much.
He said: "We need to stop having a polarised debate populated with unsubstantiated, but convenient, sound bites. I fully support the move to a cleaner energy system. I am simply very frustrated that people peddle misinformation at best, and disinformation at worst."
These statements clash with Labour's election campaign promises from last year. At that time, Ed Miliband committed to reducing household bills by £300 annually by 2030 through a transition to clean energy. The Labour manifesto said: "Families and businesses will have lower bills for good, from a zero-carbon electricity system."
After assuming office, Mr Miliband reiterated this commitment, announcing: "The only way to guarantee our energy security and cut bills permanently is to speed up the transition away from fossil fuels and towards home-grown clean energy."
However, Mr O'Shea disputes that viewpoint. He cited the Government's Contracts for Difference (CfD) scheme as an example, which assures renewable energy producers a set, index-linked price for every megawatt hour they generate. When market prices dip under this agreed "strike price" the difference is passed onto consumer bills.
Mr O'Shea said: "Wholesale electricity prices in the UK may well be set by international gas prices." He added: "But the wholesale price does NOT set the price that the majority of consumers pay in the UK. That's because of the Contract for Difference that renewable energy producers get. Essentially, no matter the wholesale price, renewable producers with a CfD get the 'CfD strike price'."
Contracts under the CfD system generally last for 15 years, which means consumers are committed to those prices for an extended period. Highlighting the cost disparities, he mentioned that the average wholesale price of electricity last year was recorded at £82.11 per megawatt hour, while recent offshore wind projects achieved strike prices up to £82.16, and solar and onshore wind rates were around £70 – not enough to significantly lower bills. When it comes to pioneering green technologies, the costs soar: floating wind technology is priced at £195 and tidal stream generation at a staggering £240.
Centrica is a major figure in the energy market, supplying approximately 7.5 million households and 400,000 businesses through its British Gas wing, and invests in a wide range of energy solutions from nuclear to gas and renewable projects like batteries and solar. The company boasts a workforce of 21,000 employees.
Mr O'Shea's stance has been backed by figures on the political right. Reform UK's Energy Spokesperson Richard Tice said: "Another energy expert admits the British people have been deeply misled. More renewables will not bring the electricity price down."
He added: "We have sacrificed jobs, industries and wealth on a lie. Net zero is the most stupid policy ever imposed on our nation." Conservative MP Andrew Bowie, the shadow energy minister, lashed out at Labour's eco commitments, alleging: "Ed Miliband's mad dash to net zero by 2050 has been built on ideological dogma, with a total disregard for the consequences inflicted upon the British public."
Yet the Department for Energy Security and Net Zero stood by their strategy. A spokesman said: "We are making the UK a clean energy superpower to get off the rollercoaster of fossil fuel markets controlled by dictators and replace that with clean homegrown power we control."
He continued: "That is how we can protect family finances and our national finances. As evidenced by the National Energy System Operator's independent report, clean power by 2030 is not just doable but would lead to a more secure energy system, potentially reducing electricity costs and lowering bills."
Despite the International Energy Agency's data indicating UK's electric charges are among the highest in the developed world – 50 per cent above Germany's and quadruple the US prices – British Gas recently rolled out perks like complimentary electricity on select days bolstered with surplus renewable energy, aimed at managing grid demand while nudging consumers towards greener practices.
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