24 February 2009 – Britain’s power industry needs to invest at least 234bn pounds ($340.7bn) by 2025 to secure supply and meet its targets for carbon emissions and renewable energy, a study by Ernst & Young showed.
Reuters reports that Ernst & Young has upgraded its estimates for the investment required for the UK energy sector from its previous study last June, which put the figure at 165bbn pounds by 2020.
Steve Jennings, partner and head of Ernst & Young’s power and utilities team, told Reuters the big difference came from a jump in costs for renewable generation and the nuclear build programme, which was not included in its last study.
“The cost of renewable generation has increased significantly,” he said, adding the costs for offshore wind came up to over 2600 pounds per kilowatt hour from 1900 pounds because of component inflation and weakening pounds.
Ernst & Young’s study assumed more than 40 per cent of electricity would come from renewable sources from 2020 and that carbon emissions would be cut by 26 percent by 2020 from 1990.
Britain has to renew almost all of its aging nuclear power plants, which currently account for about 20 percent of the country’s electricity supply.
Jennings said: “Broadly, investment is going to be double from what it currently is. We are saying profits are going to have to be double what they currently are, even though the level of returns are the same,” he said.