UK Confirms Record £1.5 Billion Budget to Support Green Power

(Bloomberg) -- The UK will allocate a record £1.5 billion ($1.9 billion) to support new renewable power capacity in an upcoming auction, a crucial step as the government works to eliminate carbon emissions from its grid. 

The beefed up budget includes £1.1 billion for offshore wind farms and confirms a Tuesday report by Bloomberg News. It comes after an auction last year failed to attract bidders because the guaranteed power price was too low. 

“This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower,” Energy Secretary Ed Miliband said in a written statement.

The higher budget is seen as key to jumpstarting projects that can take years to build. The UK’s recently-elected administration wants to have a zero-carbon power grid by 2030. The last government had also increased the maximum price and the budget to help restart investment in the sector.

The funding won’t come from the central government’s budget, so shouldn’t impact fiscal considerations by the Chancellor of the Exchequer Rachel Reeves. Instead, it will come from charges on energy bills. 

In addition to offshore wind funding, the government will offer £270 million for emerging technologies, such as floating wind farms, which have so far only been deployed at a small scale. 

Britain uses contracts for difference to support new renewable capacity, under which developers agree to sell power at a fixed price for 15 years. If market prices drop below the contract, then energy consumers pay to top them up, while higher prices can result in billpayers being reimbursed.

“The auction needed a reset after last year and we welcome the increased budget, which is an important investment signal,” said ScottishPower Chief Executive Officer Keith Anderson.

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