Plans to reduce the cost of green energy projects could lead to a new surge in onshore wind farms, experts warn.
Ed Davey, the energy secretary, told the Telegraph he was preparing to announce that onshore wind and solar farm developers would be forced to compete in reverse auctions to secure government subsidies.
The plans should drive down the cost to bill-payers of individual projects – but could see an increase in the number of onshore wind projects built as a result.
Green energy subsidies are currently set at different levels for each technology. The Government’s Energy Bill, which passed into law last week, aims to see technologies compete against each other “as soon as practicable”.
Proposals for auctions are due to be unveiled in coming few weeks but government documents released earlier this month show it is considering “introducing competition for certain technologies or groups of technologies”.
Simon Moore, environment and energy fellow at think-tank Policy Exchange, said: “There could well be an increase in the number of onshore wind farms if the government brings forward plans which allow different low-carbon technologies to compete against each other. At the moment onshore wind is substantially cheaper than other forms of low carbon technology.”
In a paper released on Monday, Policy Exchange backs auctions, arguing that “mature technologies such as onshore wind, biomass and energy-from-waste should be able to compete in an auction process as early as next year” in order to drive down the costs of green energy for bill-payers.
But Mr Moore acknowledges there are “understandable concerns about the impact wind farms could have on the landscape”.
“That’s why it’s vital that policymakers and developers work closely with local communities on the design and potentially even financial incentives of any proposed wind farm,” he said.
The Government originally planned to begin technology-specific auctions in 2018 but has had more interest in projects than the money available.
Mr Davey said auctions would now be introduced “a lot quicker than 2018-19” though did not say whether the auctions would be technology-specific or for groups of technologies.
“We are getting more investment come forward than people had expected and moving to competitive allocations quicker than people expected,” he said. “Onshore [wind] and solar are going to competitive auctions very quickly.”
John Constable, director of the Renewable Energy Foundation, a stern critic of green costs, said that while onshore wind may appear cheaper than other technologies in official figures, this “doesn’t reflect the full cost to the consumer” such as managing the intermittency of wind.
“The worry is if they start auctioning these things off they might end up inadvertently causing yet another stampede for onshore wind because the true costs of wind are not reflected in these ‘strike prices’,” he said.
“The principle of reducing costs for the consumer is good. But you have to make sure the prices being used and medium for competition actually reflect the real costs. They need to do a full system cost study if they want to do an auction that is meaningful.”
Michael Fallon, the energy minister, told an industry conference last week: “It is unfair for hardworking base-rate taxpayers to be funding large scale deployment of mature technologies renewables that shouldn’t need further subsidy.
“We will set out our plans for the introduction of competition shortly.”
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