Five offshore wind farms and three biomass projects will provide millions of homes with clean power.
The UK government has agreed deals to financially support eight major new renewable energy projects that will power millions of homes.
Five of the schemes are offshore windfarms, which the Conservative party plans to back in its general election manifesto over cheaper but more controversial onshore wind power.
The projects will create 8,500 jobs and add 4.5GW of electricity capacity to the national grid, around 4% of the UK’s generating capacity, or enough to power more than 3 million homes. The projects were worth up to £12bn in private sector investment, the government said.
The combined projects are expected to add 2% to an average household electricity bill by 2020, or £11 per household, but energy and climate secretary, Ed Davey, said the government’s “whole package” on energy reforms would ultimately lower consumer energy bills.
Davey said: “These contracts for major renewable electricity projects mark a new stage in Britain’s green energy investment boom. By themselves they will bring green jobs and growth across the UK, but they are a significant part of our efforts to give Britain cleaner and more secure energy.”
“These are the first investments from our reforms to build the world’s first low carbon electricity market – reforms which will see competition and markets attract tens of billions of pounds of vital energy investment whilst reducing the costs of clean energy to consumers.”
The agreements are part of a transition to a new subsidy regime, with the old one being phased out in 2017. The deals agreed today are known as investment contracts and are an early form of the new “contracts for difference”, which offer low-carbon generators a guaranteed price for their electricity. A similar contract for difference was agreed last year for the first nuclear power plant in the UK in decades, at Hinkley point in Somerset.
Industry welcomed the deals but said the UK needed more onshore windfarms, which the Tories are considering capping.
Maf Smith, deputy chief executive of trade body RenewableUK, said: “We’re pleased to see this vote in confidence for these five offshore wind projects, which will make an important contribution to keeping the lights on, and create much-needed growth in coastal areas.”
“However, we need far more onshore and offshore wind projects over the next decade if we’re not to find our energy security threatened, and the UK further exposed to price shocks from imported fossil fuels, so it’s important that the contracts for difference regime works for all renewable energy projects, not just those that have secured early contracts.”
The offshore wind projects include Dong Energy’s 250MW Burbo Bank extension in Liverpool Bay, Statoil/Statkraft’s 400MW Dudgeon off the coast of Norfolk, a consortium-backed 1.2GW windfarm off the coast of Yorkshire, Dong Energy’s 660MW extension off the coast of Cumbria. 1.7m, and the 664MW Beatrice windfarm in the Outer Moray Firth in Scotland.
Three biomass projects have also been given the green light, including a conversion of one part of Britain’s biggest coal power plant, Drax in North Yorkshire, plus Lynemouth Power Station in Northumberland and MGT’s Teesside plan at Middlesborough.
A contract for a second unit at Drax was turned down, however, leading its owner on Wednesday to announce legal proceedings against the government.
Dorothy Thompson, chief executive of Drax, said: “Whilst we are pleased to have been offered an investment contract for our third unit conversion, we are disappointed by today’s decision on the ineligibility of our second unit. Sustainable biomass provides a very reliable, flexible and cost effective renewable power source for the UK consumer.”
Drax’s AGM in London was met by anti-biomass protesters on Wednesday, with three campaigners being removed from the meeting after unfurling a banner.
Oliver Munnion, a campaigner at the group Biofuelwatch, said: “Drax’s conversion actually allows it to burn more coal long into the future. Even after the conversion they’ll be burning some 3.7 million tonnes of coal every year from opencast mines in the UK and imported from places like Colombia, where communities have been forced off their land for expanding mines. Biomass isn’t about renewable energy, it’s about keeping old, polluting power stations running, when they should be closing down.”
Davey took a shot at the previous Labour government’s record on renewable energy, saying: “Record levels of energy investment are at the forefront of the government’s infrastructure programme and are filling the massive gap we inherited. It’s practical reforms like these that will keep the lights on and tackle climate change, by giving investors more certainty.”
He also said the contracts announced today were part of the government’s package of measures that would lead to lower household energy bills.
Davey told the Today programme: “You’ve got, for example, energy efficiency, product standards, which are all reducing the amounts of energy that people need and therefore cutting their bills. If you see something in isolation, yes, you can say ‘well, that’s putting up costs a bit’ but actually, if you take the whole package, not only are we reducing people’s bills overall but we’re getting the secure, clean energy that we need to make sure our consumers and our businesses get the energy they need.”
Ann Robinson, director of consumer policy at comparison website uSwitch.com, said: “While delivering secure, clean energy is an important part of the government’s energy market reforms, it is imperative that affordability and keeping household costs to a minimum remain at the heart of its policy. Although 2% over the next six years may not sound like a significant increase, with the average household energy bill now at an eye-watering £1,265 a year many consumers will be left feeling concerned by this announcement.”
Green groups welcomed the agreements but called on the government to do more on renewable energy and offer greater clarity to the industry.
Alasdair Cameron, energy campaigner at Friends of the Earth, said: “The government must prioritise cutting energy waste and further increasing renewable power, and abandon its reckless pursuit of fracking – which is dirty, unpopular and will not deliver for years.”
Jimmy Aldridge, energy campaigner at Greenpeace, welcomed the commitment but said: “If ministers are serious about shaking off our chronic addiction to volatile, dangerous fossil fuels, they should drop their good cop, bad cop routine on clean energy and get on with the job of making Britain’s energy cleaner and safer.”
The government also said on Wednesday that more than £30bn had been invested in renewable electricity generation since 2010, creating thousands of jobs. Last week, the third part in a trilogy of reports from the UN’s Intergovernmental Panel on Climate Change concluded that a switch from fossil fuels to renewable energy sources would not “cost the world” financially.