Household bills will come down over the coming years as the new government boosts investment in green technologies, it has been claimed.
Mark Carney, the former governor of the Bank of England, said the technologies developed with the help of the new UK government’s National Wealth Fund will bring household costs down by the end of the decade. While households will bear some of the cost of the initial investments in infrastructure and green energy, according to Carney, by 2030 they will be benefiting from effects such as improved property insulation, lower renewable energy costs and reduced costs for running electric vehicles.
The National Wealth Fund, included in Labour’s election manifesto and launched in its first week in power, will invest £.73bn of borrowing-funded public money in a bid to unlock around £20bn in private investment in the green economy. The aim is that the investment will ultimately produce a return for the taxpayer while helping stimulate long-term projects in areas such as decarbonisation, green steel, green hydrogen and giga factories. But how exactly will investing in green energy benefit ordinary households? Here are some examples:
Cutting energy bills
The annual electricity bill for the average household would fall by around £300 by 2030 if the UK takes firmer steps to meet renewable energy targets, according to Ember, amounting to around £8.7bn off household bills. It said that under commitments set out by the previous government, the UK should be able to produce almost all of its electricity from sources such as offshore wind power. Those targets aren’t currently being met, however.
Reducing energy price volatility
Shifting to renewables could also reduce energy price volatility by reducing the UK’s dependence on gas and other fossil fuels, which leaves it exposed to price shocks such as that caused by the Russian invasion of Ukraine. The new UK government plans to establish Great British Energy, a publicly-owned energy generation company that would aim to maximise the UK’s benefits from clean power opportunities.
As it stands, UK energy generators are either partly or entirely owned by non-UK governments and companies. The idea is that a state-owned energy company would help boost investment in newer technologies such as green hydrogen and tidal power generation, with the aim of cutting bills while also reducing the country’s reliance on imported fossil fuels.
Adding to your property value
More than two thirds of people planning to buy a new home in the next two years are looking for properties with green technology that helps improve energy efficiency, according to a survey. And while cutting energy bills, improving energy efficiency and reducing carbon emissions are the main drivers, green tech modifications can also reduce the overall value of the property by 15%, according to Ovo Energy.
Similarly, research in 2022 by Scottish Power and the WWF suggested that using low carbon technologies such as solar panels, heat pumps and more effective insulation could add an average of £10,000 to the value of a property. The same study estimated that using a combination of those green technologies could cut energy bills by up to £1,878 a year.
Creating investment opportunities
The launch of the National Wealth Fund and plans for Great British Energy are expected to boost sectors engaged in clean energy, with potential benefits for investors and pension savers. Great British Energy will have a mandate to invest in clean energy technologies and projects, with the aim of attracting more private investment in the relevant companies and sectors. More immediately, the National Wealth Fund will invest in industries such electric vehicle batteries, carbon capture and green hydrogen.
In doing so, the two initiatives will also make it more attractive for both institutional investors (such as pension funds) and private investors to invest in clean energy sectors that come with risk but have the potential to produce significant long-term returns. Funds and investment trusts that specialise in the targeted sectors – and areas such as onshore wind farms, with the ban on their construction being lifted – could be well-placed to take advantage of new opportunities that arise.
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