Skip to content

Green Energy Even More Expensive As Oil Price Drops

Tim Webb, The Times

Households face paying subsidies for wind farms for years longer than planned because of the slump in oil prices, according to a former government adviser.

Under a new subsidy regime, onshore wind farms are guaranteed payments worth about twice the present market rate for electricity for 15 years.

Offshore wind farms stand to receive about triple the present rate for the same period via the levies on household energy bills.

The government has claimed that the subsidies will gradually disappear in the 2020s as gas prices rise.

However, oil prices have fallen from $100 to $70 since September because of oversupply.

The forward UK gas price has also fallen by about 8 per cent over the same period, making renewables more expensive compared with gas plants.

Dieter Helm, professor of energy policy at the University of Oxford and a former adviser to the Department of Energy and Climate Change, said: “If the gas price goes down, it widens the gap between the wholesale cost of electricity and the cost of renewable subsidies. The subsidy is not going to disappear as DECC predicted.”

Full story (subscription required)