Britain will hold yearly auctions to support new renewable projects from 2023, the government said on Wednesday, as it seeks to boost low carbon power production to meet its climate goals.
Britain has a target to reach net zero emissions by 2050 and plans to generate 40 gigawatts (GW) of electricity from offshore wind by 2030 - up from around 10 GW currently.
The move also comes amid spiraling energy costs, with a cap on prices for around 22 million British households due to rise 54% from April because of record wholesale gas prices.
"The more clean, cheap, and secure power we generate at home, the less exposed we will be to expensive gas prices set by international markets," Business and Energy Secretary Kwasi Kwarteng said in a statement.
Under Britain’s contracts for difference (CfD) support scheme, the government offers a contract, or strike price, for a guaranteed minimum price of electricity for companies whose renewable projects win in an auction.
If the wholesale electricity price goes above the strike price the renewable generators pay back the difference to the government.
Some detractors of renewable power have blamed the energy price hike in part on the government’s renewable support schemes which are paid for by levies on electricity bills.
However, the newly announced April price cap level is the first where consumers have not had to pay any costs relating to the renewables CfD scheme, Jonathan Brearley, chief executive of Britain’s energy regulator Ofgem said on Tuesday.
Costs relating to environmental and social costs on an average energy bill will fall by 4% from April, Ofgem data showed.
(Reporting by Susanna Twidale Editing by Mark Potter)