Miliband plots surge in wind farm subsidies to rescue net zero
Ed Miliband is plotting a surge in the wind farm subsidies added to electricity bills to prop up his ailing green power target.
The Energy Secretary is preparing to ditch key limits on the cash diverted from bills to turbine developers, The Telegraph can reveal.
The manoeuvre, uncovered in official documents, is expected to allow Mr Miliband to bankroll thousands of extra turbines in the next few years.
He has pledged to make Britain's electricity supply 95pc carbon-free by that date. The target has been attacked as a 'fantasy' by the Conservatives, partly because there are too few offshore wind projects in the pipeline.
That problem was exacerbated last week with Ørsted's decision to abandon its massive Hornsea 4 scheme to build 180 giant turbines off Yorkshire, giving 2.4 gigawatts (GW) of new capacity – enough for 2.6m homes on a windy day.
To accelerate wind farm construction, Mr Miliband wants to scrap limits on the total subsidy on offer to offshore developers in Whitehall auctions.
Instead a target would be set for the amount of electricity to be generated, with the cost to households only worked out afterwards.
A Whitehall insider agreed costs could rise initially, suggesting that the investment in renewables now would bring prices down in years to come.
'It means short-term pain in energy bills, for long-term gain,' he said.
The scheme was revealed in a paper from Mr Miliband's Department of Energy Security and Net Zero (DESNZ). 'In place of a budget, the Government would publish a capacity ambition,' it said.
Mr Miliband wants between 43GW and 50GW of offshore wind by 2030. Only 16GW is operational so far, with another 12.6GW in planning. That leaves a shortfall of about 15GW just to hit the minimum, which would broadly mean adding an extra 1,500 giant 10-megawatt turbines to the 1,500 already planned.
These must all be commissioned in the next couple of years to be working by 2030 – but developers are demanding extra subsidies to undertake the massive challenge.
The main vehicle for such subsidies is the UK's contracts for difference (CfD) scheme, under which energy developers are guaranteed an inflation-linked minimum price for each megawatt hour of electricity their schemes produce.
Ørsted won a bid last autumn to build the wind farm under the CfD scheme.
The £85-per-megawatt-hour price approved by Mr Miliband is now deemed to be too low to cover the costs of Hornsea 4. It implies he will have to offer much higher guarantees to secure more wind farms.
Analysts estimate that commissioning enough wind farms to meet the 2030 target could cost up to £11bn a year. They also estimate that the increase would add £135 a year to the average domestic energy bill.
Mr Miliband's own officials also warned of potentially surging energy bills from his latest move.
An impact statement said: 'This proposal may increase the subsidy (levy) cost of the Contracts for Difference scheme as it may facilitate buying increased capacity.
'Additionally, it is possible that the proposal may increase the subsidy cost of the CfD scheme if it leads to developers increasing their bid prices.'
The Renewable Energy Foundation calculates that CfDs added £7.8bn to bills last year. John Constable, its director, estimated that hitting the 2030 target could require an additional £7.9bn subsidy to offshore wind and £3bn to onshore developers.
Mr Constable said: 'With a small tweak to the green subsidy rules Ed Miliband can give himself the freedom to quietly and quickly add many billions of pounds a year to national electricity bills.
'If the Chancellor were to propose tax increases of this scale affecting every household and business in the country there would be a storm of criticism in Parliament and elsewhere.
'How much longer will the Prime Minister allow the Department of Energy Security and Net Zero to operate without democratic accountability?'
A DESNZ spokesman said: 'We need to build clean energy infrastructure now to get bills down in the long-term and protect family finances from volatile fossil fuel markets that have caused the biggest cost-of-living crisis in memory.
'These reforms will pave the way for clean power by 2030, taking control of our energy system with home-grown power that we control and giving industry more certainty to build here in Britain.
'The contracts for difference scheme balances the need for significant renewables deployment to deliver the benefits of a low-cost clean power system, whilst providing best possible value for money for consumers.'
The UK has about 3,000 offshore turbines, with a capacity of 16GW – plus 9,200 onshore wind turbines with a capacity of 15GW.
The next CfD auction, the repeatedly delayed Round 7, is slated for the autumn.
Ana Musat, from RenewableUK, the wind industry trade body, said: 'We have an opportunity to secure a record amount of new renewable energy capacity in this year's auction.
'It's good to see the ministers looking at some of the key reforms which are needed to unlock this.'
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