Government proposals to block onshore wind farms could cost energy consumers at least £0.5 billion, a new report has warned.
Citizens Advice says a pledge to end new subsidies for onshore wind farms could stifle crucial attempts to lower bills and reduce harmful emissions.
The new report, Generating Value?, from the national charity says excluding onshore wind – one of the cheapest renewable technologies in the UK – from auctions for future subsidies could drive up electricity bills.
The absence of onshore wind from the auctions could result in more expensive technologies being purchased instead. Researchers suggest it could add as much as £0.5billion to bills over the 15-year duration of subsidy contracts, or the equivalent of around £30million a year.
Those costs relate to a single auction round for new low carbon generation, but there may be a number of auctions over several years, so the total cost to consumers may be higher still.
The report welcomes efforts by the Government to rein in the costs of deploying low carbon generation, but says the policies on onshore wind could be counter-productive.
The Government has already closed the Renewables Obligation, the main form of financial support for projects, to onshore wind development from April 2016. It will set out this autumn how the alternative Contract for Difference (CfD) scheme will be changed so that it no longer subsidises onshore wind farms.
Unless solar power sees further dramatic cost reductions and can be widely developed to fill a potential gap created by blocking onshore wind, Citizens Advice fears customers could lose out.
The charity recommends that onshore wind remains eligible for ‘subsidy free’ contracts, by lowering the cap on the price they receive to a level equivalent to the cost of new-build gas generation.
Changes to the planning system already underway will block onshore wind in parts of the country where communities do not welcome them, making a blanket ban unnecessary. The report adds that local communities should be able to have their say if they support developments.
Gillian Guy, Chief Executive of Citizens Advice, said:
“Households are already struggling with high energy bills.
“To lower this burden the Government needs to make the most of consumers’ money invested in renewables – this means using the cheapest technologies available.
“Many of the Government’s proposed policy changes to clean energy subsidies are necessary given the overspend in the low carbon budget. But, moves to block onshore wind could make it more difficult to keep bills low while keeping the lights on and reducing emissions.”
Consumers could see a further £1bn in savings if support for less mature technologies, such as offshore wind, were scaled back, and cheaper low carbon options such as solar and onshore wind were instead allowed to bid for the entire subsidy budget. This figure also relates to a single auction round, so eventual consumer savings could be higher than this.
The report also proposes new checks, to ensure that energy projects which are unable to enter competitive auction processes are subject to full impact assessment before receiving billpayer guarantees.
Proposed projects or policies which cannot pass cost-benefit tests after factoring in a credible long-term carbon price should be rejected, the report adds.