Households face an extra £16 a year on their energy bills due to £16.6 billion in green subsidies paid to five giant offshore wind farms and three biomass plants, the government’s spending watchdog has warned.
The National Audit Office [NAO] criticised the government for awarding the “unnecessarily generous” subsidies, which could turn out to be a waste of public money.
Tom Greatrex, the shadow energy minister, said: “Consumers will be rightly outraged if they are left to foot the bill for this Tory-led government’s incompetence.”
The NAO report is the latest blow to the government’s controversial plan to fund a massive expansion of wind farms and other renewables, which already faces a legal challenge from Drax, the North Yorkshire power station.
The plan means offshore wind farms are guaranteed to receive three times the current wholesale electricity price, while the biomass projects get double.
The NAO criticised the government for awarding the subsidies regardless of how much each specific project cost, which could result in the developers making excess profits.
Ministers should have held a competition where subsidies were awarded to the lowest cost projects instead, saying it was “not convinced that the government sufficiently protected consumers’ interests”.
Ministers had originally planned to award them last summer in order to prevent a construction freeze of green power plants which could threaten the UK’s renewable energy targets.
However the plan was delayed by a year, with the NAO questioning whether meeting the targets was still an issue. It noted that the Department of Energy’s own business case showed that there was “no clear economic monetised benefit” from going ahead.
The public accounts committee, which will hold a hearing into the subsidies next week, also criticised the government for failing to include a claw-back provision, allowing any excess profits to be claimed back from renewable developers. Margaret Hodge, who chairs committee, said: “I am frustrated that, despite the huge consumer subsidy that has gone into supporting these projects, the department has failed to put in place any arrangements to recoup consumers’ money.”
The Department of Energy said: “As the NAO’s report recognises, these early contracts are designed to offer better value to billpayers than the previous system. Without that investment, projects would have been unable to go ahead or been significantly delayed.”
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