Excluding onshore wind from bidding for support available for low-carbon generation could add £30 million per year to the cost of meeting UK targets, and it should have access to a bigger subsidy pot than offshore wind, according to new research from Citizens Advice.

The consumer watchdog, in an examination of the value for money of low carbon support titled Generating Value, also said the government should set an absolute per MWh cap on subsidy, transfer support intended to stimulate jobs growth from bill payers to taxation, and crucially, re-establish energy efficiency policy.

The watchdog said “An efficiently run decarbonisation policy is likely to be expensive; consumers should not have to bear the additional burdens created by an inefficient one.”

The value for money of government’s support for different low-carbon technologies has varied dramatically, and the Department of Energy and Climate Change (Decc) “lacks constraints to stop it depleting its budget on expensive pet projects”, Citizens Advice said, highlighting the conclusion in several reviews that so-called FID-enabling contracts for offshore wind and biomass were far too generous.

“The desire of the government to live within its means and remedy the alarming overspend on the LCF is entirely appropriate,” the watchdog said and it called for clearer and more consistent cost benefit analysis, saying past experience had involved “clear assessments of costs and hazy speculation about benefits”. It said the costs of one often-cited benefit – job creation – should be funded from general taxation.

In examining the renewables options funded by subsidy, the watchdog said “The short term consumer interest is better served by building the cheapest available technologies”. Although it may be in consumers’ long term interest to fund less developed technologies “Decc needs to start demonstrating the value (if any) of keeping the more expensive technology options open. If it cannot, they should not be funded.” That would mean more money available for onshore wind – whose bids could be capped at a “subsidy free” level – and solar,  and less for offshore wind, the watchdog said.

Meanwhile, Citizens Advice said the government should urgently reinstate energy efficiency programmes as a national infrastructure priority, targeting them at the fuel poor. Energy efficiency “remains the best way to cover the inevitable costs of the low carbon transition” and it should be funded by taxpayers, not bill payers, the group said.

 

Read the full report here