Government Doubles Net Zero Renewables Budget

Labour leader Sir Keir Starmer (L) and shadow energy secretary Ed Miliband view and tour Excalibur, an offshore jack up platform for wind turbine construction and maintenance in Holyhead, Wales, on March 25, 2024. (Christopher Furlong/Getty Images)

The government has announced it doubling its net zero renewables budget to a record £1.5 billion, its largest-ever investment.

On Wednesday, Energy Secretary Ed Miliband announced that the renewable energy auction budget will be increased to £1.5 billion, up by £500 million from last year.

The costs will come out of energy bills and not general taxation.

The government said that funding is necessary as it “will accelerate the delivery of clean, cheap, low-carbon electricity to families and businesses, generated by renewable energy technologies such as wind turbines and solar panels.”

It added that this “includes £1.1 billion for offshore wind—the backbone of the UK’s clean energy mission—which has more budget available than all of the previous auctions combined, sending a strong signal to industry to invest in UK waters.”

Contracts for Difference

The Contracts for Difference (CfD) scheme is the government’s main mechanism for supporting low carbon electricity generation. 

Renewable energy developers compete for CfD contracts to sell electricity at a fixed price. This gives companies certainty even if wholesale electricity prices plummet, therefore facilitating project financing. This is funded through a levy on energy suppliers.

These subsidies are paid back when wholesale electricity prices are higher than the agreed Contract for Difference price.

Last September, the auction, failed to attract a single new offshore wind farm.

According to the Institute for Government this was because the government set the maximum price for offshore wind too low.

Commenting on Wednesday, Miliband said, “Last year’s auction round was a catastrophe, with zero offshore wind secured, and delaying our move away from expensive fossil fuels to energy independence.”

Energy Minister Michael Shanks said that increasing the budget by more than 50 percent “will boost industry confidence to back clean energy, attracting cutting edge clean technologies to Britain as we accelerate to a decarbonised power sector by 2030.”

The government claims there is a “built-in design to keep costs low for billpayers.”

Climate campaigners welcomed the move, but said that more needs to be spent.

Doug Parr, policy director at Greenpeace UK, said “this is an important step towards achieving the government’s target of decarbonising our power network by 2030.

“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.”

Revamp

Last month, ex-Conservative MP Chris Skidmore’s net-zero lobby group, Mission Zero Coalition, urged the government to revamp the Contracts for Difference (CfD) auctions.

It said that under the current system, if the fixed price is too low, costs can escalate, leading wind farm companies to pull out, claiming they are no longer financially viable.

“These are risks which UK developers are taking for the right to enter an auction,” it said, adding that this “is clearly unsustainable and is a major risk factor for the attractiveness of the UK market.”

The Epoch Times contacted the Net Zero department for comment.

PA Media contributed to this report.