A call for upgrading the grid

UK energy analyst Inenco has warned that Britain's archaic National Grid will not be able to cope with the push towards renewable energy without massive new investment by the government. It has emphasised on the fact that the UK's electricity infrastructure is so outdated and expensive that the renewables push towards wind farms and other forms of microgeneration will place an impossible strain on the network.

It is being indicated that wholesale electricity prices will be forced up by 20 percent when the European Union's carbon trading scheme becomes law.

Inenco forecasts that energy costs will rise by a fifth are double the estimate of the Government, which says prices may go up by 10pc.

Under the EU carbon trading scheme, heavy users of electricity will be forced to bid for permits to produce extra carbon dioxide above their capped limit, as reported by telegraph.co.uk. Many permits are still free at the moment, but a limited UK permit trading trial raised £54m for the Treasury last year and they will be traded fully on the open markets by the end of 2012. The current price for one allowance, which represents about 2MWh of electricity, is between €20 (£19) and €25.

Ian Parrett, energy analyst at Inenco, said it was likely that increases in wholesale electricity prices would be passed on to consumers.

"The key issue is that price-based measures tend to affect the least well-off the hardest," he said. "We need to make sure that the costs aren't just borne by those who have no alternative."