Households will see their electricity bills soar to cover the £17 billion cost of bringing energy from offshore wind farms, MPs are expected to warn this week.
Building wind farms a few miles off the coast has been the preferred alternative to putting up more huge turbines in the countryside.
But the influential Public Accounts Select Committee (PAC) is likely to warn that consumers will pay for the policy, while power firms make billions due to a ‘soft’ deal agreed with the previous government.
Labour announced in 2010 that to meet its target of producing 15 per cent of Britain’s energy from renewable sources within a decade, a huge drive to build wind farms around the coast was being launched.
As part of the project, bids were invited from companies for licences to lay cables and set up transmission routes from the offshore wind farms to the National Grid on the mainland.
But when the first six licences granted were examined in detail by the Committee last October, one MP described them as ‘a licence to print money’. For while consumers could see their bills rise by about seven per cent – about £33 a year on average – the transmission companies’ revenue is not only guaranteed but protected against inflation.
Committee members condemned the over-generous way those licences were drawn up when they questioned key players from the energy industry, the regulator Ofgem and the Department of Energy and Climate Change (DECC) last year. Their final report on the subject is expected tomorrow.
An earlier National Audit Office study revealed that over the 20-year terms of the transmission deals, consumers could face paying an extra £17 billion on their electricity bills. Some experts claim the total bill for renewable energy could be much more.
Professor Gordon Hughes, a specialist in offshore energy economics and a former World Bank adviser, has forecast that average electricity bills could rise by between 40 and 60 per cent between now and 2020, adding about £200 to £300 to the average annual electricity bill.
‘The customer bears all the risk because they underwrite the payments to the offshore transmission operator who paid for the building of the transmission network if there isn’t enough electricity delivered to recover their costs,’ he said.
‘Government wants to reduce risks borne by the investors to encourage them to invest, and the only way they can do that is by passing it on to the customers, because the Government doesn’t want to bear it.’
Another big winner from the offshore wind farm bonanza could be the Queen.
Experts say the turbines could eventually bring in up to £250 million a year for the Crown Estate, which owns much of Britain’s foreshore and almost the entire seabed out to 14 miles.
Prince Charles has described wind farms as a ‘horrendous blot on the landscape’, but has been enthusiastic about offshore energy.
MPs say cost of offshore wind farms will add £17bn to YOUR household energy bills |
|Wind Watch relies entirely
on User Funding