Jeremy Hunt closes loophole that allowed turbine owners to benefit from surging prices
Wind farms will be prevented from keeping excessive profits after an overhaul of subsidy rules designed to hold down bills.
Ministers have closed a loophole that allowed turbine operators to take advantage of surging electricity prices by delaying the start of their green energy contracts with the Government.
It comes despite an outcry from developers over rising costs, which they say are threatening the new projects needed to hit net zero by 2050.
Michael Chesser, economics and markets manager at RenewableUK, the trade group, said: “At a time when developers are already having to deal with massive global increases in costs, this step will put further pressure on the viability of renewable energy projects.”
Most offshore wind developers in the UK build new projects with the help of government contracts that guarantee they make a set revenue, to justify the expense of building and running the turbines.
Under this scheme, the developers agree a fixed price with the Government for each unit of electricity generated over the first 15 years of the wind farm’s life.
If the market wholesale price turns out to be lower than this guaranteed price, the Government pays the developers the difference, through a levy on consumer bills.
If the wholesale price turns out to be higher than the guaranteed price, the developer has to pay back the difference.
However, this system was designed years before the surge in electricity prices. Wholesale prices are now so high that developers can make a huge short-term profit even without taxpayer support.
As a result, some developers have been using a clause in the contracts that allows them to postpone when the pricing arrangement kicks in, for example if construction has been delayed.
The Government is now changing the rules, so that developers will not be able to delay the start of their contract for “commercial gain”.
https://www.telegraph.co.uk/business/2023/03/16/wind-farms-blocked-keeping-excessive-profits/
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