The government is under fire for potentially causing higher energy prices by creating obstacles to the growth of wind farms.
The Energy and Climate Intelligence Unit (ECIU) has raised concerns that these barriers could lead to a massive £1.5 billion increase in annual energy bills.
Analysis from ECIU suggests the forthcoming government Contracts for Difference (CfD) auction, designed to facilitate new offshore wind farms, could potentially witness only a handful of projects circumventing the stringent Treasury guidelines.
This dire scenario could translate into an adverse financial impact of approximately £1.5 billion annually for UK billpayers.
The essence of the CfD auctions lies in securing renewable energy developers with a fixed price for the electricity their projects generate.
This measure affords them insulation against potential price fluctuations for a span of multiple years.
Yet, the ECIU warns that the odds of projects successfully navigating through Treasury regulations are bleak, a trend that has manifested in previous rounds.
According to Jess Ralston, an Energy Analyst at the ECIU, the government’s attention appears to be directed at North Sea gas licenses and tax incentives for oil companies, actions that are unlikely to lower energy bills.
Jess Ralston said: “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 told Energy Live News: “We do not recognise these figures – last year’s CfD 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 ten million homes per year.
“CfD 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.”
