Power Generation News – Early October 2021

Ministers are set to propose switching green levies from electricity to gas, in an effort to encourage the uptake of heat pumps.

The proposals, originally reported in the FT, suggest that the shift would be staggered over the course of ten years and would not impact the overall cost of a dual fuel bill.

Currently, 23% of the cost of electricity is made up of environmental and social obligation costs, with the costs of numerous decarbonisation programmes funded through the levy. However, gas costs include less than 2% of environmental and social obligation costs.

With the ban on the installation of new gas boilers set for 2035, and of petrol and diesel cars set for 2030, there is mounting pressure to rethink the structure of green levies.

A BEIS spokesperson said: “We want to encourage people to take up technologies such as heat pumps and electric vehicles. Affordability for consumers and taxpayers will be at the heart of our approach, as will ensuring protections remain in place for the most vulnerable.”


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