Keir Starmer isn’t even in Downing Street yet already his government-in-waiting is in danger of being defined by its £28 billion green spending pledge, just as Tony Blair’s administration was defined by ‘45 minutes’ – the claimed deployment time of Saddam Hussein’s fabled weapons of mass destruction. First, Starmer promised to spend that sum on green initiatives in every year of the next parliament. Then it was revised down to spending £28 billion in the last year of the next parliament. Last week he dropped the pledge and said instead that £4.7 billion a year would be spent on green investment.

But in the melee a more rash policy has been overlooked: Labour’s pledge to decarbonise the electricity grid by 2030 – which brings the present government’s target forward by five years. This is one of the five great ‘missions’ laid out in the party’s pre-manifesto pitch, along with the creation of a state-owned company, Great British Energy, to achieve it. Not only will it save carbon emissions, Labour claims (without any evidence or published workings) but it will also save us an enormous amount of money, taking ‘up to £1,400 off the annual household bill and £53 billion off energy bills for businesses’ within six years. This is quite a boast, considering the average household pays £1,928 a year in energy bills.

The European countries where power was cheaper than average in 2022 tended to be those with more nuclear

A large part of Labour’s decarbonisation plans are laid out in a document called ‘Make Britain a Clean Energy Superpower’. Labour says it wants to quadruple offshore wind and double onshore wind by 2030, as well as to triple solar capacity. But this is likely to be impossible, not least because the National Grid won’t be able to get hold of enough subsea cables to plug in the required number of extra offshore wind turbines. There are four suppliers of such cables in the world – all of them have full order books until 2030.

Would Labour’s plan be doable even if it could get the required kit – and would it really save households money? Labour’s case is based on the idea that wind and solar energy are the cheapest forms of energy around. It repeats an often-quoted conceit that, at one point in 2022, ‘renewable energy was nine times cheaper than gas’ and asserts that it remains much cheaper.

But the ‘nine times’ claim was never true. It was made by CarbonBrief, a green energy advocacy website. They arrived at the figure by taking the prices paid for gas power at the very peak of the market in the summer of 2022 – £446 per megawatt-hour – as European countries rushed to fill their gas storage facilities ready for winter, following the loss of Russian gas after the invasion of Ukraine. It then compared them with the long-term, guaranteed ‘strike prices’ offered to operators of wind and solar farms over a 15-year period. In an auction in 2022, wind and solar farms agreed to a strike price of £48 per megawatt–hour.

It was like comparing the cost of a bus journey using a season ticket to that of hailing an Uber in rush hour. If you take the average price of gas power over the past 15 years, it is considerably less than wind or solar power.

Since 2022, the economics have changed sharply again: the price of gas has come down, but the price of renewable energy has jumped. Last July, the Swedish energy company Vattenfall pulled out of a North Sea wind farm project, complaining that the strike price it had agreed to the previous year was no longer enough. When the government held another auction for wind and solar power two months later, setting a maximum strike price of £44 per megawatt-hour for offshore wind, it didn’t receive a single bid.

The price of wind energy was on a downward trend while commodity prices were falling and interest rates were near zero (most of the costs come upfront, so these projects are especially reliant on cheap credit). That trend has now been firmly reversed. No one knows what wind will cost in 2030. It’s impossible to predict if commodity prices or interest rates will return to levels that make it the cheapest form of energy. Any claim to save consumers money is therefore spurious.

It is quite true, as Labour asserts, that UK businesses are paying too much for electricity in comparison to other industrial countries. But would that change if we had more renewables? The inconvenient fact is that Britain is already one of the world leaders when it comes to wind energy (24.6 per cent of our electricity generation came from wind in 2022). The most successful country on that score is Denmark (55 per cent). Yet Danish businesses pay nearly as much for their power as UK ones do. The European countries where power was significantly cheaper than average in 2022 tended to be those with high shares of nuclear power, such as France and Finland.

Nuclear does seem to be part of Labour’s plans for decarbonising the grid; it says it wants to get Hinkley and Sizewell ‘over the line’ and back small nuclear reactors (SMRs). But that isn’t going to help achieve its 2030 target. The latest opening date for Hinkley C is 2031; Sizewell C hasn’t even started.

If you are going to have a grid based on large quantities of intermittent wind and solar, the biggest problem is what you do for backup or storage. Britain already has, in theory, sufficient wind and solar capacity to meet the average power demand of 36.6 gigawatts (we have 28.7 gigawatts of installed wind capacity and 14.6 gigawatts of solar). But we never get there because the wind doesn’t blow all the time and the sun doesn’t always shine. Shortages are usually particularly acute in winter.

Labour’s document mentions that it wants to invest in ‘long-term energy storage’ and carbon capture and storage (CCS) – the latter of which could allow gas to be used as backup while claiming to be near zero–carbon emissions. The present government has already announced £20 billion to go to CCS, but its own plans envisage the first plant to be operational only by 2035, five years after Labour’s target date for decarbonising the grid.

There is also no conceivable way that adding CCS to a gas plant could save consumers money, as it is an extra cost imposed on plants which currently run without it. As for energy storage, that adds costs, too. Is it even practical to build sufficient energy storage to back up wind and solar? The Royal Society looked at this in a report published last September. It concluded that it could potentially achieve it by 2050, but even then it’s marginal. Based on weather records over a 37-year period, it estimated the UK would require a thousand times its current energy storage capacity. The cheapest form of storage in the long run, it reckoned, would be hydrogen stored in salt caverns. It then estimated an average cost of electricity from a grid made up of wind, solar and energy storage, taking into account that only a proportion of electricity would have to be stored. At current prices this came out at between £52 and £92 per megawatt-hour. The average wholesale price of electricity produced in Britain over the past decade has been £67 per MWh. In the past year it was £93 per MWh.

If these are the figures that Labour is using to try to claim that a wind- and solar-based grid could save us money, there are two problems. Firstly, the Royal Society’s estimates were based on the assumption that wind and solar power costs £30-£45 per megawatt-hour. Yet, as previously mentioned, the downward trend in the cost of wind has been reversed; something closer to £70 per megawatt-hour would now be more reasonable.

If you are going to have a grid based on intermittent wind and solar, the problem is what you do for storage

Secondly, the Royal Society’s analysis was based on assumptions about the future cost of hydrogen storage – in 2050. We don’t yet have such technology installed at commercial scale. No one knows what it will cost. What is certain is the country is not going to have massive hydrogen storage facilities available by the end of this decade.

The government has made life difficult for itself by committing to net-zero carbon emissions by 2050, but that is still beyond the career horizons of most of today’s politicians – and ministers are not actually claiming it will save us money (and nor are they being honest about the costs).

Labour, however, has set itself a target for decarbonising the grid which lies only just beyond the lifetime of the next parliament – and claiming, to boot, that it will save us all fantastic amounts of money. Regardless of the £28 billion disaster, it has set itself up for huge failure on a flagship policy.