Wind Power Price Soars 11% as Government's Promise to Cut Bills by £300 Fails to Materialise

Subsidies never make energy cheaper.

The claims that renewable energy is cheaper than power from fossil fuels and that renewable energy prices are falling were dealt another blow on Wednesday. After a year of the Labour Government’s constant promises of "lower bills", the expected prices and terms of the next auction for renewable energy contracts have been published and they show substantial increases, except for solar. For anyone with a grasp of basic arithmetic, the blow was only not fatal because the claim that 'renewables are cheaper' was already dead. But dyscalculia is rife, especially in Westminster.

Under the Contracts for Difference (CfD) subsidy scheme, developers of renewable energy installations such as wind and solar farms offer bids into an auction, which were initially held every three or so years, but are now approximately annual. These auctions agree the prices, known as the ‘Strike Price’(SP) that developers will be paid for each megawatt hour that they generate – a fixed price, in contrast to other wholesale commodity markets, such as gas. Ahead of the auctions, the government sets out the terms of the auction, and the indicative 'Strike Price' or ‘Administrative Strike Price’ (ASP) it is expecting for each technology type. A table showing the previous and latest auction’s ASPs is shown below.