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Wind farms get generous subsidies for another six years

Wind farms will get generous subsidies for at least another six years, after ministers signed a deal to give them double the market rate for the electricity they produce.

Ministers said onshore wind farms should get at least £100 per megawatt-hour, when the market rate for electricity is currently less than £50 per mega-watt hour.

Offshore wind farms will get triple the market rate at £155 per megawatt-hour in a deal described by City analysts as “astonishingly expensive”.

The difference will be met by a subsidy from the taxpayer, which is as generous – if not more so – than under the current regime.

The subsidies will continue despite David Cameron’s promise this month to “think very carefully” about green subsidies for energy sources such as wind farms and solar panels, as they “end up on consumer bills”.

It is likely to anger backbench Tories, after 100 MPs campaigned to stop the spread of onshore turbines blighting the British countryside.

George Osborne ordered a 10 per cent cut in subsidies for onshore wind farms last year and senior Conservatives had hinted that there would be more to follow.

Developers have promised that they can reduce the cost of generating energy from wind substantially over the next few years to make it more affordable.

However, under the plan, subsidies will only be cut slightly in 2017 by five per cent for onshore wind and 13 per cent for offshore wind.

Peter Atherton, analyst at Liberum Capital, said the cost of offshore wind turbines in particular looks “astonishingly high”.

“The costs are actually rising, rather than coming down as we’d been led to believe,” he said.

The renewables industry said the level of subsidies would still mean it is “challenging” for them to make a profit.

“The most important ingredient remains investor confidence and that will take time to land,” said Maria McCafferty, chief executive of RenewableUK.

“The secret is consistent long term support and investors seeing that Government is behind renewables and low carbon generation for the long term.”