Ministers have abandoned plans to ensure that subsidies for wind farms can be cut if the developers gain excess profits after refinancing.
The Government said it had scrapped the idea after a backlash from industry stoked fears foreign investors would take their money elsewhere.
However, it suggested that subsidies for new nuclear reactors could still be subject to such refinancing clauses.
Ministers are introducing a system of subsidies aimed at encouraging tens of billions of pounds of investment in new ‘low-carbon’ power plants this decade.
Developers of wind farms and nuclear reactors will receive long-term contracts guaranteeing them a price for the electricity they will generate. The so-called “strike price” will be subsidised through levies on consumers’ energy bills.
In November, ministers had “considered the potential role for ‘refinancing’ clauses, which would have reduced strike prices should certain refinancing events reveal particularly high returns”.
Typically a refinancing might see a company benefit by renegotiating its debt-equity structure for a project, taking advantage of a fall in interest rates or improvement to its risk profile.
But on Wednesday ministers said: “Feedback received from investors and developers was that the imposition of such refinancing gain-share clauses could create an upfront barrier to certain forms of investment, and may have introduced additional risk.
“We are also mindful of the importance of capital recycling to investment in new-build projects, and of the impact of these conditions on investors’ perceptions of the attractiveness of the UK as a place to invest (particularly those less familiar with the UK framework and who have a choice about where they invest their capital).”
The Government had therefore concluded “that a refinancing/gain-share clause is not required” in most standard contracts.
While most subsidy contracts will follow a standard 15-year format, some, such as those for new nuclear reactors, will be negotiated directly.
Ministers are in negotiations with French giant EDF over the strike price for its proposed £14bn Hinkley Point nuclear plant in Somerset, which is thought to be in line for a 35-year contract.
In a document on Wednesday ministers said it “may be appropriate to include refinancing provisions” for contracts that are directly negotiated.
A spokeswoman for the Department of Energy and Climate Change said: “Government is currently engaged in bilateral negotiations with EDF on new nuclear at Hinkley Point. The terms of this contract will be published in a transparent way after the negotiations have concluded.
“For bilateral negotiations contract terms will be determined on a case by case basis. An agreement will only be reached if it provides value for money for the consumer.”
Wednesday’s document also revealed that ministers had decided against use power price indices compiled by price reporting agencies when setting subsidy levels, because of “concerns around the reliability”.
It said it would only consider using them in some extreme cases and then only when it could be sure that the prices had not been affected by “market manipulation”.
Energy regulator Ofgem is investigating how price reporting agencies work following allegations of price-rigging in the gas and petrol markets.