Energy bills will rise by 2 per cent after the Government awarded contracts to a series of renewable energy projects that could cost up to £1 billion in subsidies, Ed Davey has said.
The Energy Secretary suggested people will be able to offset the rises to their bills by buying more “energy efficient” products for their homes.
The contracts, which include offshore wind farms and conversions of coal-powered plants to run on biomass, are the first awarded under the Government’s energy market reforms.
Each of the eight projects, which include five offshore wind farms, will receive a special contract which will effectively guarantee prices for the renewable energy suppliers.
These could cost up to £1bn each year in subsidies, but the Government says they would encourage firms to invest much more than that in low-carbon electricity generation.
Overall the projects would help power up to three million homes, attract around £12 billion in private investment and create 8,500 jobs, Mr Davey said.
Funding the projects will also mean that every British household bill will have a levy of two per cent added by 2020. Over recent months energy providers have raised prices, pushing up the annual average bill to £1,323.
Mr Davey said the projects may push up bills but that the energy provided will be “secure” and “home-grown” taking away the risks associated with importing energy from other countries with more volatile political conditions, such as Ukraine.
He told Radio 4’s Today programme: “If you see something in isolation, yes, you can say ‘Well, that’s putting up costs a bit’ but actually, if you take the whole package, not only are we reducing people’s bills overall but we’re getting the secure, clean energy that we need to make sure our consumers and our businesses get the energy they need.”
He added: “You’ve got, for example, energy efficiency, product standards, which are all reducing the amounts of energy that people need and therefore cutting their bills.”
Mr Davey also indicated that the Government would consider changes to the trespass laws to enable fracking companies who wanted to drill under private land to start work.
Mr Davey said the Government was “looking at the access rights” for companies who wanted to frack horizontally under the land of a number of different landowners.
“The question for both geothermal and shale gas is what is the way to ensure that those landowners are compensated and those projects can go ahead”, he added.
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