Brits to be £1.5billion poorer as Treasury rules set to block some wind farms
Taxpayers will be £1.5billion worse off because strict Treasury rules are expected to block some offshore wind farms. New farms are set to produce electricity much cheaper than the regular wholesale electricity price - even with high inflation.
But Treasury rules are likely to constrain the number of offshore wind farms getting through the latest Government auction for them, which is due to complete in September, according to analysis by the Energy and Climate Intelligence Unit.
It has sparked concerns that bills will remain high as the cost of gas is predicted to stay higher than pre-crisis for the foreseeable future. Tory rebels have been calling for a vote on scrapping green targets. It comes after the surprise Conservative by-election win in Uxbridge and South Ruislip amid protests over the capital's ultra low emission zone.
In an interview with ITV last night, Mr Sunak said he was committed to the target of reaching net-zero by 2050. “I have two young daughters. I care about the environment that we, I, leave them. My job is to leave it in a better state than I found it,” he said. “But I think the path to net-zero has got to be one that we tread carefully, that we bring everyone along with us on that journey and we make that journey in a proportionate way… We'll not unnecessarily burden them with extra hassle or extra cost as we do it.”
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Britain’s offshore wind fleet is second largest in the world after China. This has largely been achieved through the Government’s Contracts for Difference (CfDs) scheme, a system of auctions for future projects.
But strict rules meant the previous funding round failed to max out its budget, with wind power missing out. Taxpayers lost out on £225million a year in savings because they were forced to pay for more expensive electricity, the ECIU said. The intelligence unit now predicts this will rise to £1.5bn per year because cheaper renewable energy projects are failing to make it through Treasury rules. ECIU said the rules don’t take account of high gas price predictions and they put an arbitrary limit on the number of farms that can be contracted.
Jess Ralston, energy analyst at the ECIU, said: “Government seems to be focused on North Sea gas licences and tax breaks for oil companies that won’t bring down bills while tying up offshore wind farms - that generate electricity cheaper than gas - in red tape. What is going on? Even with inflation pushing costs up for offshore wind, it will still generate electricity much cheaper than gas power stations. Stifling wind farms pushes up bills. Treasury’s rules seem to be actively working against bringing them down.”
A spokesperson for the Department for Energy Security and Net Zero said: “We do not recognise these figures – last year’s Contracts for Difference scheme auction was the largest ever, issuing contracts to nearly 100 clean tech projects, and we increased this year’s budget to reflect the large volume of eligible applications received. The UK is a world leader in renewable technologies, with the four largest operational offshore wind farms in the world providing enough capacity to power the equivalent of at least 10 million homes per year. Contracts for Difference is designed to protect generators against price fluctuations, and compares favourably to other international schemes. We understand there are supply chain pressures for the sector globally, and we are listening to their concerns.”
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