Govt changes tack on green subsidies

THE Government is reining-in the spiralling costs of renewable power subsidies which it said threatened to push up household bills.

The plans include closing support for small-scale solar projects, changing the way renewable projects qualify for payments and modifying subsidies for biomass plants.

The proposals come just a month after the government said it would scrap new subsidies for onshore wind farms from April next year.

“We can’t have a situation where industry has a blank cheque and that cheque is paid for by people’s bills,” Energy and Climate Change Secretary Amber Rudd told the BBC.

Figures published by the Department of Energy and Climate Change (DECC) show the cost of renewables subsidies could reach £9.1bn a year by the 2020/21 tax year compared with a proposed budget of £7.6bn.

Some investors said the new approach had undermined the industry’s case for investing in renewable electricity production.

Richard Kirkman, technical director at Veolia UK, a subsidiary of French environmental services group Veolia, told Reuters: “The government has stripped away without warning incentives for projects on which many companies have made major investment decisions in renewable technologies.

The DECC also it would no longer guarantee subsidies offered for biomass conversion projects.

As part of extensive reforms of Britain’s electricity market, the government has been changing the way it supports renewable energy by replacing direct subsidies with a contracts-for-difference (CfD) system.

Under the scheme, qualifying projects are guaranteed a minimum price at which they can sell electricity and renewable power generators bid for CfD contracts in a round of auctions.

But Rudd on Tuesday cast doubt on whether there would be another auction of CfD renewable support by telling a parliamentary committee she could not confirm it would take place.

Under the first round of auctions held last December, the government awarded contracts to 27 renewable projects worth a total of more than £315m.

Previously, the government said the budget for the next CfD allocation round would be confirmed later this year and that the second auction could take place in the autumn.