Onshore wind farms will have their subsidies cut in favour of an increase in support for offshore wind power.
Ministers will announce big changes to the how subsidies are allocated to renewable energy with support cut for onshore wind and solar energy.
Chief Secretary to the Treasury Danny Alexander has described the shift in the subsidies as “a rebalancing” and said overall spending would not change.
The prices that the Government will pay for the energy produced from in onshore wind and solar power will be cut from 2015 while the price paid for energy from offshore wind farms is set to be increased.
The latest “strike prices” – the prices paid for energy – were published in draft in June and are set substantially above the current value of energy, as a form of long-term subsidy to encourage firms to invest.
However the final figures that will come in a written ministerial statement will represent major changes.
The change is necessary because there has been so much investment in onshore wind and solar energy that they no longer needed so much state support, Sources from both coalition parties said
In contrast, they said, offshore wind sources still needed more subsidy to encourage long-term investment.
One Conservative source told the BBC he expected “quite a dramatic cut” in prices for onshore wind in 2015 and beyond. Another spoke of the “beginning of the end for mature renewables”.
It is also thought that the policy will help to counter the threat from UKIP which opposes all wind farms on principle.
Mr Alexander denied suggestions the move was in response to Tory MPs unhappy at wind farms being sited in their constituencies.
The Energy Secretary, Liberal Democrat Ed Davey, said “final plans” for a reform package on strike prices would be announced this week during an interview with BBC Radio Humberside on Monday.
Energy Minister Michael Fallon also hinted at changing the policy in a speech earlier this week.
He said: “We will also announce very shortly now the final support prices for each renewable technology. Of course new power has to be paid for and we should be open about that.
“But investment in renewables cannot be done at any price. It must be affordable for consumers. And the cost of that new investment needs to be spread more fairly, much more fairly.”
In October energy companies were criticised for the high profits they make from off and on shore wind farms due to separate a high consumer subsidy added to household bills.
An analysis of the industry’s figures by the Renewable Energy Foundation (REF), a think tank, shows that Britain’s largest energy firms received almost £900 million last year through the subsidy.
In the past Energy companies have blamed green energy levies, which include the wind farm subsidy, for adding £110 to the average household fuel bill before recent energy bill rises from the Big Six took effect.
The subsidy is worth £200 million more than the income from the electricity actually produced by Britain’s on and offshore wind farms. In total, the big six received more than £1.5 billion in revenues last year from wind farms they own.
Under present rules, onshore wind farms receive about half their income through the consumer subsidy and half through selling the electricity they produce while offshore wind farms receive a subsidy twice the value of the electricity they generate.
[rest of article available at source]
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