Ministers should establish a new energy commission to spur on construction of power stations because successive governments have failed to encourage enough fresh power capacity in the UK, according to a House of Lords report.
Subsidy-backed growth in renewable energy projects, such as windfarms, has deterred the construction of new conventional power plants, the economic affairs committee claimed.
The peers envisage the new energy commission would oversee auctions where all technologies, including gas power, competed for guaranteed electricity prices. The auctions would provide the required amount of capacity and cap carbon emissions.
At present the government only allows low-carbon power, such as windfarms and new nuclear power stations, to compete in auctions for such deals, known as contracts for difference.
The influential cross-party group of peers concluded that successive governments have got their priorities wrong on energy policy by giving priority to carbon emissions cuts – a statutory duty under the Climate Change Act – over keeping costs down and keeping the lights on.
The report has sparked an angry response. Robert Gross, director of the centre for energy policy and technology at Imperial College, London, said: “The term ‘post truth’ has become over-used. Yet it would be possible to take all the evidence the committee presents and tell a completely different story: there’s been huge success in growing renewables and reducing emissions from the power sector.”
Lord Hollick, the committee’s chair, said: “We are critical of the drift that’s taken place over the last 15 years or so, which has delivered on the decarbonisation agenda but very much at the expense of consumers paying 58% more than they were in 2003. On the affordability front we haven’t looked after consumers.”
The peers, who include the former chancellor Norman Lamont, and a former head of the civil service, Andrew Turnbull, said security of supply should become the key aim of energy policy, above decarbonisation and cost.
“Low-carbon but chronically unreliable electricity is not acceptable. Similarly very cheap prices at the expense of frequent shortages would be unacceptable,” the report says, which also claims fossil fuels have remained cheaper than renewable sources.
But Paul Massara, the former chief executive of npower who now runs the renewable energy firm North Star Solar, said the committee was simply wrong to say fossil fuels were always cheaper than renewables, and condemned the report as “backward looking”.
Darren Baxter, a researcher at the Institute for Public Policy Research thinktank, said: “A failure to keep the pace up with decarbonisation, as suggested in this report, would be a disaster for the north [of England] and its growing low-carbon economy.”
Hollick told the Guardian that the government had micromanaged the energy market and did not need to interfere as much. He said the government “should now allow the energy commission to move forward, to run auctions, to fill the gap and to build a properly balanced [energy system]”.
Hollick denied the report was anti-renewables. “Exactly the opposite. We see renewables very much as the way forward,” he said, arguing that more public money should go into R&D in renewables and energy storage.
The committee also urged the government to publish its plan B if the Hinkley Point C nuclear power station, which is expected to provide 7% of the UK’s electricity from 2025, is delayed or even cancelled. Hollick said the biggest surprise during the committee’s inquiry was the “fragility” of the government’s nuclear ambitions, which envisage new nuclear reactors in Somerset, Suffolk, Anglesey and Cumbria.
“It is imperative that the government publishes it contingency plans for how it will make up the capacity due to be provided by these plants in the event one or more does not succeed or is delayed,” the report says.
Hollick said he expected the government’s energy back-up plan to be made up largely of new gas power stations and offshore windfarms.
A spokeswoman for the Department for Business, Energy and Industrial Strategy said: “Keeping the lights on is non-negotiable. Our top priority is making sure UK families and businesses have secure, affordable energy supplies.”