Ministers are preparing to scrap all subsidies for onshore wind farms by 2020 in a major victory for campaigners against the controversial energy source.
David Cameron and George Osborne are to come down firmly on the side of those who object to payments currently worth £400 million a year to companies who produce onshore wind, The Sunday Telegraph has learned.
Ministers are preparing to scrap all subsidies for onshore wind farms by 2020 Photo: Getty Images
Despite opposition from the Liberal Democrats, who strongly support more renewable energy, the subsidy regime for onshore wind and solar panels is now firmly expected to be phased out by the end of the decade.
A senior Conservative source said: “This is now very much the direction of travel.”
At present, householders pay for subsidies to renewable energy producers through an extra charge on household electricity bills.
An email sent by Oliver Letwin, the Cabinet Office minister, makes it clear that financial support both for onshore wind and solar panels is expected to have “disappeared” within eight years.
Within weeks, Ed Davey, the Lib Dem Energy Secretary, will announce details of subsidies for renewable energy covering the period 2013-2017, following a consultation on whether they should be cut by more than the 10 per cent reductions already planned.
Mr Osborne is understood to be pressing Mr Davey for onshore subsidy cuts of around 25 per cent for that period.
However, the words from Mr Letwin, who is a key Conservative policy guru, go much further in strongly suggesting the entire subsidy regime will be history by 2020.
Sent last week to Terry Stewart, president of the Dorset branch of the Campaign for the Protection of Rural England (CPRE), Mr Letwin’s email states: “I anticipate that subsidies for both solar photovoltaic and onshore wind will come down to zero over the next few years and should have disappeared by 2020, since both of these forms of energy are gradually becoming economic without the need for subsidies.”
The news will delight local groups fighting new turbine developments and more than 100 Tory MPs who wrote in protest to David Cameron earlier this year.
However, the revelations are bound to spark protests both from the green lobby and from electricity firms which benefit from the subsidies. Just days after the 2010 election, the Prime Minister pledged to lead the “greenest government ever.”
The timing is also embarrassing for Nick Clegg, the Deputy Prime Minister, who flies to Brazil on Tuesday for the United Nations Rio +20 Earth Summit, where 26,000 delegates, including heads of government will try to plot the way forward on sustainable development.
A source close to Mr Davey last night laid bare coalition tensions over the issue, saying: “It is very important that we don’t send out mixed messages to investors.
“Our support for renewables attracts a lot of investment and jobs to Britain – jobs we badly need at the moment.”
Currently there are more than 3,000 onshore wind turbines in Britain, with another 4,500 expected to go up.
Critics say they are inefficient because the power they produce cannot be stored and the wind cannot be guaranteed to blow at times of greatest energy demand.
Many also regard them as unsightly, while the subsidy regime has forced up energy bills.
In January, 101 Tory MPs wrote to Mr Cameron, calling for onshore subsidies to be “dramatically cut” – well beyond the 10 per cent reductions already in the pipeline.
Overall subsidies paid out to renewable energy producers amount to around £1.5 billion a year.
Chris Heaton-Harris, the Tory MP who organised the letter to the Prime Minister on wind farms, said: “I struggle to see how anyone can argue for a policy that gives huge sums of money to big landowners and the big six energy companies, whilst at the same time it thwarts growth and forces tens of thousands into fuel poverty.
“This policy is not green, progressive or sensible. The Chancellor should take an axe to these subsidies as soon as possible.”
John Constable, director of the Renewable Energy Foundation, a UK charity publishing data on the energy sector, and a long-term critic of subsidies to renewables, said: “Extremely high subsidies have harmed the reputation and integrity of the renewables sector, which has been corrupted by easy money and undeserved fortunes.
“Reductions in future subsidies are welcome, but may not be enough to protect the consumer in very hard times, and retrospective cuts, supported by windfall taxes, cannot be ruled out.”
Mr Stewart, who had written to Mr Letwin to complain about plans for 160 wind turbines in Dorset, said: “The subsidy for wind turbines is iniquitous. It is a stealth tax.
“These subsides add £80 to the average electricity bill, but nowhere does it say that. It is being paid out to rich land owners and foreign energy companies and developers.”
A spokesperson for the Department for Energy and Climate Change (DECC) said the 2020 date referred to by Mr Letwin was an “aspiration”. She added: “It is always our aspiration to end subsidies for any energies.”
BLOB Subsidies paid to windpower companies are forcing up to 50,000 households a year into fuel poverty, according to analysis of government figures by the House of Commons Library.
Increased electricity costs because of all subsidies paid to all renewable sources of energy have pushed 100,000 families into fuel poverty, defined as the need to spend more than 10 per cent of household income to maintain a satisfactory heating regime.
Wind power payments are estimated to account for about half of these. Around 4.75 million households in Britain are thought be in fuel poverty according to DECC.