Government Increases Budget for Net Zero Renewables
The net zero department stated that increasing the budget by over 50 percent will help “boost industry confidence to support clean energy.”
The government has declared it is doubling its net zero renewables budget to a historic £1.5 billion, marking its largest investment ever.
Energy Secretary Ed Miliband announced on Wednesday that the renewable energy auction budget would be raised to £1.5 billion, a £500 million increase from the previous year.
The expenses will be covered by energy bills rather than general taxation.
The government emphasized that funding is crucial as it “will expedite the delivery of clean, affordable, low-carbon electricity to households and businesses, produced by renewable energy technologies like wind turbines and solar panels.”
Additionally, it mentioned that this includes £1.1 billion for offshore wind—the foundation of the UK’s clean energy endeavor—which surpasses all previous auction budgets combined, signaling to the industry to invest in UK waters.
Contracts for Difference
The Contracts for Difference (CfD) scheme is the primary method the government uses to support low carbon electricity generation.
Renewable energy developers vie for CfD contracts to vend electricity at a predetermined price. This affords companies certainty even if wholesale electricity prices decline, thereby facilitating project financing. The funding for this is sourced from a levy on energy suppliers.
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These subsidies are repaid when wholesale electricity prices exceed the agreed Contract for Difference price.
In the past September, the auction failed to attract any new offshore wind farms.
According to the Institute for Government, this was because the government set the maximum price for offshore wind too low.
Speaking on Wednesday, Miliband remarked, “Last year’s auction round was a disaster, with zero offshore wind secured, delaying our transition from costly fossil fuels to energy independence.”
Energy Minister Michael Shanks mentioned that increasing the budget by more than 50 percent “will enhance industry confidence to support clean energy, drawing cutting-edge clean technologies to Britain as we progress towards a decarbonized power sector by 2030.”
The government asserts that there is a “built-in design to keep costs low for billpayers.”
Climate activists welcomed the decision but indicated that more funding is needed.
“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,” he added.
Revamp
Last month, former Conservative MP Chris Skidmore’s net-zero lobby group, Mission Zero Coalition, urged the government to revamp the Contracts for Difference (CfD) auctions.
It pointed out that under the current system, if the fixed price is too low, expenses can escalate, causing wind farm companies to withdraw, stating they are no longer financially viable.
“These are risks that UK developers take in order to participate in an auction,” it noted, adding that this “is clearly unsustainable and poses a significant risk to the attractiveness of the UK market.”
The Epoch Times reached out to the Net Zero department for comment.
PA Media contributed to this report.
