Electricity Market Review

Claire Coutinho Excerpts

Thursday 10th July 2025 Commons Chamber

[Claire Coutinho (East Surrey) (Con)]

I thank the Secretary of State for advance sight of his statement. I know that this has been a difficult decision for him. He told everyone that his flagship mission was to commission more renewable power than ever before by 2030—more wind than ever before and faster than ever before in a market that was already facing supply-chain challenges and soaring costs. I said at the time that it was completely unfeasible but that if he was going to do it he should take every opportunity to minimise the grid infrastructure that needs to be built and the costs of his plans. On the other hand, I know that he will have had wind developers telling him that if he takes those decisions and makes those choices, they will not be bidding into his auction in the next couple of years—the auctions he needs them to bid into so that he can meet his self-imposed targets—because they want to protect their returns.

When faced with a choice between protecting the profits of wind developers and cutting bills for the British people, the Secretary of State has chosen the wind developers, who know that they have him over a barrel. In setting himself an unachievable 2030 target that was based on ideology and ideology alone, he was telling those wind developers that he has to buy whatever they are selling, no matter the price. A little over a year ago, the Secretary of State told the country that bills would come down by up to £300, but his statement today shows that when push comes to shove he will choose higher bills for the British people to fund profits for renewable energy companies. Worse still, what he did not mention is that today’s announcement means higher bills to pay wind farms billions in constraint payments not to produce energy but simply to switch off.

I have warned the Secretary of State repeatedly about the risks of building more wind before grid, and I asked him to continue my work on what a full system cost of energy would look like, which includes the cost of back-up and constraint payments. But he did not listen. He axed that work because he did not want to know what those costs were. Instead, last year he signed us up to the most expensive wind prices in a decade, at about £86 per megawatt-hour. That is almost 15% higher than the average cost of electricity for the last year, which has been about £74 per megawatt-hour. This year’s prices will probably be the same, if not higher, and he wants to extend those contracts to 20 years. He has not explained how locking us into much higher prices for longer will bring down bills—but lower bills is what he has promised the British public.

There is more. The Secretary of State’s plan requires more grid to be built faster than before—that means £74 on to household bills. His plans mean that constraint payments for wind farms to switch off will rise to £8 billion—that means £100 on to bills. Now we read that we will be paying solar farms to switch off when it is sunny too, and the Office for Budget Responsibility says that green levies will rise by £5 billion.

People may have noticed that the Secretary of State used to talk a lot about cheaper energy but now talks about less volatile prices. What his Back Benchers need to realise is that most people would not swap a 4% variable rate mortgage for an 8% fixed one. What they care about is the price of their bills, and they want cheaper prices. If he was truly interested in bringing down bills, he would not have scrapped the analysis that I started last year to find out the true cost of a system dominated by wind and solar.

I have now read—twice in one week—that Downing Street is starting to pressure the Secretary of State about when his plans might actually bring down bills. All I can say is: I share the feeling! Before repeating all the empty promises about cutting bills by £300, Downing Street might have wanted to ask where his evidence was, but I will ask him now. Will he reinstate that cost of energy work so that we can clearly see the differences between the systems? Will he set out a road map to show exactly how he will lower bills? Will he confirm that he will not sign up to prices in this year’s wind auction that are higher than the current average cost of electricity? Can he also confirm whether he saw a full cost-benefit analysis of the choices in front of him today, and does he share the views of Ofgem and NESO?

I will leave the Secretary of State with two quotes. The chief executive of Octopus Energy—one of the country’s biggest advocates of renewables—has said that the Secretary of State’s plans mean

“soaring costs, locked in for years to come, and more on the way… And the more we build, the worst it gets, for years.”

He also said,

“It’s brutal for families and crippling for growth.”

I think the Secretary of State said in his statement that the biggest problem for businesses is uncertainty, but it is not; it is high energy costs.

The second quote—perhaps the most revealing— comes from one of his closest advisers, his chief energy system adviser, who said, “If we procure lots and lots of renewable generation and then we do not build the grid that allows it to get to markets, we will be wasting lots and lots of money.” I could not have put it better myself.