Onshore wind loses out, as RHI gets boost

Decc reveals lower than expected strike prices for onshore wind, solar and energy-from-waste, but increases subsidies for offshore wind, hydro-electricity and renewable heat

Ahead of the Energy Bill’s royal assent, which is expected before Christmas, the energy department has published the levels of support large-scale renewable technologies can expect up to 2018/19.

Under the government’s planned “contracts for difference”, low-carbon energy suppliers will be guaranteed a set level of payment for each MWh of electricity they generate, called the “strike price”.

In a consultation in June, the energy department proposed the following strike prices for 2014/15: £90/MWh for energy-from-waste (EfW) plants; £125/MWh for solar farms; £100/MWh for onshore wind; and £155/MWh for offshore wind.

In most cases, the rates declined over the following four years. By 2018/19, the strike price for offshore wind, for example, was to fall to £135/MWh. However, final strike prices see slightly higher rates for offshore wind in 2018/19 (£140/MWh). Hydro-electric plants will also receive higher than expected strike prices – £100/MWh rather than £95/MWh.

Strike prices for most other technologies will be lower than those outlined in the consultation. Large solar plants will now receive £120/MWh initially and in 2018/19 will be paid just £100/MWh (down from the proposed £110/MWh). Onshore wind and EfW will recieve 5% and 12.5% less respectively than expected. EfW generators are to receive £80/MWh. This contrasts with £92.50/MWh the operators of the proposed new nuclear power plant at Hinkley Point will receive for 35 years after the plant opens.

Energy secretary Edward Davey maintained that the strike prices will boost investment in renewables by £40 billion up to 2020.

“Investors are queuing up to express their interest in these contracts,” he said. “This shows that we are providing the certainty they need, our reforms are working and we are delivering ahead of schedule and to plan.”

Meanwhile, the energy department confirmed that it was extending the non-domestic renewable heat initiative (RHI) to provide more support for more technologies. From next spring, firms investing in air-water heat pumps, commercial-scale EfW and large biogas burners will be eligible for payments under the scheme.

Decc has also increased support for combined heat and power, large biomass boilers (1MW), ground-source heat pumps and solar thermal installations.