Limits on renewables ‘will keep UK energy bills higher this winter’

theguardian.com:

Consumers will face higher energy bills than necessary next winter because of a decision by the government to limit new renewable energy generation, described as a “missed opportunity” by the renewables industry, and “outdated thinking” by a green campaign group.

Ministers have decided to authorise contracts for about 12GW of new renewable energy generation, to start construction this year, with much of it likely to come on stream before next autumn. However, the renewable energy industry estimates that about 17.4GW of projects have cleared planning permission and are “shovel-ready”.

The shortfall in what the government is prepared to allow, through an auctioning system, means many of these potential projects are likely not to be built this year, and consumers will be deprived of the energy savings on bills that come from renewable energy.

Renewable energy is now cheaper than fossil fuels, which have soared in price during the Ukraine war. Onshore and offshore wind and solar power all command about £40 per megawatt hour on the market today, but gas-fired power generation costs about £140 per megawatt hour.

Under the system of “contracts for difference”, renewable energy generators bid for contracts to produce power, but the government can set an overall limit on how much capacity it wants in the auctions, and can set limits on how much cash it is prepared to provide as incentives.

On Friday, the Department for Business, Energy and Industrial Strategy laid out plans for an auction, to take place on 5-6 July, allowing for 5GW of capacity to be competed for by onshore wind and solar, neither of which can take more than 3.5GW in total. The government was also expected to set a cap on offshore wind, of about 7GW of new capacity.