Oct 8, 2013 - The TaxPayers’ Alliance forecasts that annual government subsidies for renewable energy in Britain will rise to more than GBP 5.32 billion (USD 8.5bn/EUR 6.3bn) by 2018/19 from less than GBP 2 billion in 2013 due to capacity additions.
In a report, released Sunday, the UK organisation noted that the government was failing to fulfill its plan to reduce the cost of renewable energy. The TaxPayers’ Alliance calculates that, for example, the goal to lower the cost of offshore wind energy to GBP 100 per MWh by 2020 will most probably not be reached, as strike prices for offshore wind in 2018/19 are seen to be GBP 135 per MWh, down from GBP 155 per MWh in 2014. It also estimates that onshore wind projects will get a guaranteed electricity price twice higher than the regular power wholesale price, while offshore wind will receive triple the typical wholesale tariff.
According to the alliance, the UK government’s programme was expected to achieve cost reductions by “creating economies of scale” and supporting technological innovation. However, it has failed to do that in the renewable energy segment, as the sector still needs high subsidies. “Increasing the use of renewable energy when it requires such a generous level of subsidy will create significant costs for consumers, the association said.
Government financing for renewables are set to rise to GBP 2.35 billion in 2013/14, GBP 3.12 billion in 2015/16 and to GBP 4.59 billion in 2017/18, the TaxPayers’ Alliance estimates. The subsidies are allocated through the Renewables Obligation and Contracts for Difference -- the main incentive scheme for the sector in the UK.
The alliance said that it would be better to back research aimed at cutting the cost of renewable energy before "deploying it at scale".
From 2014, the main financing scheme for renewable energy projects in the UK will be in the form of contracts for difference (CoD). Under those contracts, investors will receive a compensation if the wholesale electricity prices drop under strike prices.
(GBP 1.0 = USD 1.608/EUR 1.185)
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