National Audit Office warns £16bn renewables contracts may be ‘too generous’

National Audit OfficeThe National Audit Office (NAO) has warned that the UK Government may have been too generous when awarding £16.6 billion worth of early renewable energy contracts.

A report from the spending watchdog has raised questions over whether consumers’ interests were sufficiently protected when the eight UK renewable generation projects – which included the Beatrice wind farm project proposed for the Moray Firth – received backing without competition.

The UK Government awarded funding under its Final Investment Decision enabling for Renewables (FIDER) Scheme in May to five offshore wind farms, a biomass power station and two coal-fired power stations that will be converted to burn biomass. Together, the eight projects are expected to produce about 4.5GW of power.

Amyas Morse, Head of the National Audit Office, said: “The Department of Energy and Climate Change awarded the early contracts without price competition to avoid an investment gap. In so doing DECC brought forward investment decisions by at least five months.”

“The investments supported should contribute towards the UK’s achieving its renewable energy target in 2020, but it is not clear that awarding fewer early contracts would have put the achievement of that target at risk.”

As the Contracts for Difference regime has the potential to secure better value for consumers through price competition, committing so much of the available funding through early contracts, without competition, has limited the department’s opportunity to secure better value for money.”

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