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Surprise: Green Subsidy Cuts Spark Green Energy Warnings

Two of Britain’s biggest energy companies have warned they will have to review the costs of some of their green power plans after the government unveiled a keenly anticipated shake-up of renewable energy subsidies.

Drax, the UK’s biggest coal-fired power generator, said some of the new biomass subsidy rates had made the investment case for three planned plant fuel-based power stations “highly challenging”.

Centrica, the owners of British Gas and also a large offshore wind developer, said the reforms meant “we need to re-examine the economics of the projects we have in our planning pipeline, including our next two offshore wind projects”.

Neither company said it was ditching any projects because of the new rates, and the renewable energy industry was broadly positive about the changes, due to start in 2013 and now going to consultation.

“There is great relief that this document has finally been published,” said Gaynor Hartnell, chief executive of the Renewable Energy Association.

“The delay had put billions of pounds worth of investment on hold.”

The changes to the nine-year-old Renewables Obligation scheme, the main way in which the UK encourages investment in large-scale low carbon power generation, would see cuts in support for both onshore and offshore wind power, though the offshore reductions would come later and not be as drastic as previously suggested.

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