Controlling the cost of renewable energy

Amber Rudd
Amber Rudd
Amber Rudd
Amber Rudd

Measures to deal with a projected over-allocation of renewable energy subsidies were announced by the government last Wednesday (July 22).

It is hoped the measures set out will provide better control over spending and ensure bill payers get the best possible deal as the country continues to move towards a low-carbon economy.

Energy & Climate Change Secretary, Amber Rudd, said: “My priorities are clear. We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way.

“Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies. We’re taking action to protect consumers, while protecting existing investment.”

Financial support for schemes such as the Feed-in Tariff (FiT) and the Renewables Obligation (RO), come primarily in the form of subsidies, which are paid for via energy bills.
The total amount of subsidies available is capped via a mechanism called the Levy Control Framework (LCF).

The Office for Budget Responsibility’s latest projections show that subsidies raised from bills are currently set to be higher than expected when the schemes under the LCF were set up.

This is due to a number of uncontrollable factors such as lower wholesale electricity prices, higher than expected uptake of the FiT and the RO and a faster than expected advancement in the efficiency of the technology, meaning renewables are projected to generate more electricity than previously thought.

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