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Wind Power: Subsidies

Energy and Climate Change written question – answered on 16th June 2011.

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Photo of Nicholas Soames Nicholas Soames Conservative, Mid Sussex

To ask the Secretary of State for Energy and Climate Change what estimate his Department has made of the cost to the public purse of subsidies paid for electricity generated by wind power in the last 12 months for which figures are available; and what estimates his Department has made of the cost for each of the next 10 years.

Photo of Charles Hendry Charles Hendry The Minister of State, Department of Energy and Climate Change

The renewables obligation (RO) is currently the Government's main mechanism for incentivising large scale renewables deployment. Under this mechanism the subsidy awarded to wind power in 2009-10 was approximately £522 million(1).

Since April 2010, small-scale wind generation has been eligible for subsidy under the Feed-in Tariff (FITs) scheme. Ofgem, who administers the scheme, is due to report on expenditure under the scheme later in the year.

We are currently reviewing the level of support for all renewable technologies, and will consult on any changes to the renewables obligation (RO) bands this summer. We are also undertaking a comprehensive review of FITs, and a consultation on this is due to be published later this year.

The recent Electricity Market Reform (EMR) consultation set out proposals for a new scheme to support all low carbon technologies. As part of this consultation we consulted on the best means to transition from the RO to the new scheme. We will include further details on the transition and assessments of the options for reform in the White Paper to be published later this year.

DECC calculations suggest that the level of wind needed to meet the UK 2020 renewable energy target through the RO, FITs and the Climate Change Levy Exemption (estimates in 2010 prices undiscounted) imply a subsidy of over £5 billion in 2020. The Government do not set targets for individual energy generation technologies but takes a market-based approach to generation.

(1) This figure uses the nominal value (equal to the buyout price plus recycle value) of a renewable obligation certificate (ROC) for 2009-10. The nominal value represents the maximum worth of a ROC to a generator but is not necessarily the amount paid by a supplier, which is dependent on bi-lateral negotiations between supplier and generator.

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