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30 April 2012
Following e-mails received today from supporters of Greenpeace, Centrica’s Chief Executive has responded to the issues raised. Sam Laidlaw’s response is detailed below.
Thank you for your email. Centrica has been at the forefront of investing in renewable energy for some time, so I was disappointed to see that this message has not yet got through. However, you raised some important points and I would like to address each of them in turn.
Climate change, and the cost of the energy we use, are two of the biggest issues facing Great Britain today and addressing these, as well as securing vital energy supplies for the UK, is at the heart of Centrica’s business strategy.
However, it’s crucial to remember that tackling climate change and securing energy to keep our homes warm needs investment; one of the challenges for all energy companies is to achieve both of those things, whilst also minimising the impact on customers’ bills.
Despite the headlines, the average British Gas dual fuel bill actually fell by £39 last year, to £1,022 from £1,061 in 2010. We were the first energy supplier to offer free insulation to all of our customers, saving 7.9 million tonnes of CO2 emissions last year, as well as saving our customers' money. We also do more than any other supplier to support vulnerable customers through our ‘Essentials’ tariff and the Warm Home Discount.
Centrica has been a huge supporter of renewable energy for many years; we built the world’s largest offshore wind farm development in 2009 and have continued to invest heavily in the Lincs wind farm, which will supply enough electricity for 200,000 homes when it comes on line later this year; we’re also planning much bigger wind projects on the UK’s East Coast and in the East Irish Sea.
One of the points you raised was about the falling cost of renewable energy, and it’s true that wind power is generally thought to be the cheapest form of renewable energy. However, wind power is still 2 to 3 times more expensive than generating power from gas. While I hope this will fall over time, the cost gap between wind and gas is very wide for generating electricity and even more so for heating. In the UK, 83% of homes are heated using natural gas. If this were replaced with wind power as the energy source, the average £600 heating bill would rise to over £2,000.
The other thing to remember is that renewable energy is intermittent. We need to keep our homes, offices and factories working when the sun doesn’t shine and when the wind doesn’t blow and, because the technology hasn’t yet been invented to store electricity on a large scale, we need gas-fired power stations to provide backup generation.
To keep the lights on, keep bills affordable and to bring down carbon emissions, we need a balanced energy mix and I believe that, along with other energy sources like gas, renewables have a key role to play. Our future investment pipeline in renewables is much bigger than anything we’ve done to date – we are awaiting consent for the Race Bank and Docking Shoal projects and have plans to develop 4,200MW in the Irish Sea; together, they would provide enough electricity to power over 3.5 million homes.
Your email suggested that we invest less than our competitors, but this just isn’t true. Looking at all forms of low carbon power, Centrica invested £3 billion in the last 5 years, putting us near the top of the league table. As a result, the carbon intensity of our power generation fleet is now the second lowest of the ‘Big Six’ energy companies, something I am proud to be able to say.
Finally, I wanted to make sure you knew that it is incorrect to suggest that we distributed 74% of our profits to shareholders last year. The information we published in our annual report of cash flow to shareholders, which is independently audited, shows that 17% went to shareholders, 31% to investment, 26% to our 40,000 employees and 26% to taxation last year.
The energy choices we face are not easy. That is why we have launched the Honest Conversation to help explain the facts and to have a clear, transparent, debate about the future and how we should tackle it.
I strongly believe that a balanced energy mix will best serve the environment, and it will best serve Great Britain. Greenpeace proposes an energy policy that is almost entirely dependent on renewables. Such a policy would be more costly for our customers and would not provide the energy security we depend upon.
If you would like more information on the work that Centrica, or British Gas, does to tackle climate change, fuel poverty and security of supply, please visit www.centrica.com/cr or follow us on Twitter.
Centrica is deeply conscious of the cost-of-living challenge facing many of our customers, and we are fully committed to tackling climate change. This is why we have been working to explore pathways for future UK energy policy to 2030 and beyond that are both sustainable and affordable.
Securing long-term affordable energy supplies for our customers is a driving force for how we do business.
British Gas provides gas and power supplies to almost half of Britain's homes. The UK energy sector is facing significant challenges and we are committed to providing greater transparency in order to build trust with our stakeholders.
Securing low carbon energy, delivering value to shareholders, stabilising prices for customers and maintaining low carbon generation.
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