Budget for new clean power schemes gets boost to record £1.5bn

The Government is increasing the budget to support the next wave of renewable energy schemes to a record £1.5 billion, it has announced.

Labour has focused heavily on making Britain a “clean energy superpower” with a target to achieve clean power by 2030 to shore up energy security and cut bills while tackling climate change.

Auctions for the so-called Contracts for Difference (CfD) scheme see developers bid to secure a fixed price they can charge for each megawatt hour (MWh) of renewable power they generate.

The previous government had already been forced to boost the pot to a record-breaking £1 billion for green power, to attract investment amid rising costs and international competition.

Now Energy Secretary Ed Miliband has announced a further increase to £1.56 billion.

That includes £1.1 billion for offshore wind – up £300 million on the previously announced pot for the technology this year.

“Instead, we are backing industry to build in Britain, with this year’s auction getting its biggest budget yet.

“This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower.”

The cost of the support, an estimated annual figure for the years following deployment, will come out of energy bills rather than from general taxation.

But when overall electricity prices rise above the fixed price wind farms could charge, as they have done during the energy crisis, money is returned to consumers.

The budget for this year’s auction also includes £185 million for established technologies such as onshore wind and solar, an increase of £65 million, and £270 million for emerging renewables such as floating offshore wind and tidal, an uplift of £165 million, the Government said.

Industry body Energy UK’s chief executive, Emma Pinchbeck described the latest announcement as a “real boost for our clean energy ambitions”.

“The sooner we can get new wind and solar projects up and running, the sooner we can boost our energy independence with clean homegrown power that reduces our reliance on expensive foreign gas and helps protect us from a repeat of the price shocks that have hit customers hard in recent years.

“Offshore wind is critical to hitting the Government’s 2030 target and we know that the vast majority of this capacity must be delivered through this auction round and next year’s.

“That remains a huge challenge but this is certainly a big step in the right direction and another welcome demonstration of the Government’s ambitions,” she said.

RenewableUK chief executive Dan McGrail said it was “great” to see the Government unlocking more investment in renewable energy projects by increasing the budget for the next auction.

He said it built on a series of positive announcements that were increasing investor confidence in the UK.

But he warned: “This auction will not unlock investment in all shovel-ready projects, so the Government will need to ensure that the next auction rounds focus on project delivery to ensure we achieve the Prime Minister’s clean power mission and increase the confidence of investors in the UK’s supply chain.”

The move was also welcomed by climate campaigners, with campaign group Possible’s Alethea Warrington describing it as  “a really positive step forward towards delivering the increased supply of clean, cheap and secure energy which we urgently need”.

“The Contracts for Difference scheme is a really efficient way to deliver new clean energy at the lowest possible cost, and which over the past few years have actually paid back money to consumers,” she said.

Dr Doug Parr, policy director at Greenpeace UK, said a power grid fit for the 21st century based on cheap renewables would help ensure energy independence, stabilise bills, and tackle the climate crisis, and was a win for the economy and jobs.

He said: “This is an important step towards achieving the government’s target of decarbonising our power network by 2030.

“But it needs to be followed up with an even bigger auction next year, faster grid connections, and more storage to hold the green power for when it’s needed.”