Going green will push Scots fuel bills up £100

• Alex Salmond was confident Scotland would be generating 100 per cent of its electricity needs from renewable energy within 15 years. Pic: PA

The claim came after First Minister Alex Salmond told delegates at an international conference in Edinburgh that he was confident Scotland would be generating 100 per cent of its electricity needs from renewable energy within 15 years.

The average customer's annual dual fuel bill is currently 1,030, with 19 of that going towards renewables.

But Nick Horler, chief executive of ScottishPower, yesterday warned consumers will have to pay more to finance the renewable revolution. Mr Horler told the Scottish Low Carbon Investment Conference that huge investment was needed to generate the power and get it to customers through a massive expansion of the electricity supply grid.

Mr Salmond's latest ambitions for wind, wave and tidal power come less than a week after he raised the target from 50 to 80 per cent of Scotland's electricity to be generated from renewable sources by 2020.

Yesterday he went further, saying: "By 2025, we should be up past 100 per cent.

"The level and scale of our ambition exceeds mere self-sufficiency. The future of Scotland is not just clean, green and self-sufficient but as a massive exporter of electricity from renewable sources."

But Mr Horler said the renewables industry and the government needed to be more honest with consumers about these costs.

His call was echoed by consumer groups and fuel poverty campaigners who said it was unfair that renewables costs were being forced on consumers regardless of income and that little was being done to actively draw it to customers' attention unless they read the small print on the back of their bills.

Accountancy firm PricewaterhouseCoopers recently produced a report which claimed the Scottish Government would have to provide funding of up to 4 billion over the next decade if the burgeoning renewables sector was to be a success.

The overall bill to pay for the renewables and low-carbon economy has been estimated at more than 200bn - including about 100bn on upgrading the grid alone. The vast majority of costs for renewable energy projects such as off-shore wind farms are financed through consumers' energy bills.

"Top up" premiums known as Rewnewable Obligation Certificates are paid to private firms when they start producing megawatt hours of renewable energy to reimburse them for the risks taken in financing projects.

Mr Horler cautioned that a massive expansion of the electricity grid would be needed to generate the power and supply it to customers.

"Someone has to make the investment and ultimately someone has to pay," he said."We have a fantastic post-recession opportunity to provide large numbers of jobs in renewable energy - but this will have to be paid for and recovered through energy prices and everybody needs to be clear about that.

"Consumer energy pricing is always an emotive issue and industry has to improve its communications, and politicians have to be open about the balance between the low-carbon revolution and the fact that this will be related to prices.

"At ScottishPower we've always sought to highlight to consumers what makes up their energy bill, including the cost of supporting the development of low carbon technology. But I think the industry and government should be more open with consumers and help them understand what these costs are and could be in the future."

While energy sources suggested the annual increase could be as much as 100, Mr Horler said this total could be reduced by encouraging consumers to reduce their energy consumption.

Fuel bills are made up of different elements with wholesale energy costs accounting for about 55 per cent, delivering energy to homes at 18 per cent and administration making up 18 per cent.

Elizabeth Gore, deputy director of Energy Action Scotland, the fuel poverty charity, called for a debate on how the development of renewable energy should be financed.

Ms Gore said: "I don't think the majority of people are aware they are paying anything towards this sector. When they open their bills they focus on how much they have to pay which can be confusing in itself.

"But no matter how much you earn you are still paying the same towards the cost of promoting renewable energy.

"The concern now is growing that the amount which is being added on or will be added in the future is too much of a burden and those on a low income will be forced to use their heating only once a day or have one hot meal to try to save money.

"If the renewables sector was financed through taxation it would take into account how much you earn."

Andrew Faulk, energy policy expert at Consumer Focus Scotland, said: "While recognising the benefits of renewables for both consumers and the environment, we don't believe that customers should be expected to write a blank cheque to support their development.

"Both Scottish and UK governments are taking welcome steps to ensure the UK has a secure, lower carbon, energy supply. Measures to help customers, such as using smart meters to cut energy use and energy efficiency schemes to stop homes leaking heat, will benefit many. However, there is no escaping the fact that steps to transform our energy system have a huge price tag and that this is going to impact hardest on the poorest consumers."

A Scottish Government spokesman said: "We can't afford not to move to a green energy supply. We already support developers through our renewables action plan, while consumers can now get payments for generating their own green energy."Taxpayers already have to meet the staggering cost of decommissioning the UK's nuclear power plants, currently estimated at over 73bn, yet the cost to consumers of renewables is tiny in comparison - currently 13 per average domestic electricity bill. Energy suppliers are improving the way that they highlight non-energy costs to consumers.

"And we are determined that communities should share in the opportunities opening up - that's why we will be consulting on a range of options to ensure community benefits are secured for the people of Scotland."