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Major changes for government renewable energy subsidies Major changes for government renewable energy subsidies
(34 minutes later)
The government is to make big changes to the way it subsidises renewable energy, it has announced.The government is to make big changes to the way it subsidises renewable energy, it has announced.
Ministers have said that they will cut support for onshore wind and solar energy, but give more backing to offshore wind power. Ministers say they will cut support for onshore wind and solar energy, but give more backing to offshore wind power.
Chief Secretary to the Treasury Danny Alexander described the shift in subsidy as "a rebalancing" and said overall spending would not change.Chief Secretary to the Treasury Danny Alexander described the shift in subsidy as "a rebalancing" and said overall spending would not change.
But Labour said "chopping and changing" pricing was bad for business.But Labour said "chopping and changing" pricing was bad for business.
The price producers are promised for onshore wind power and solar energy will be cut from 2015, while the amount paid for offshore wind power will be increased.The price producers are promised for onshore wind power and solar energy will be cut from 2015, while the amount paid for offshore wind power will be increased.
The shift on wind energy comes ahead of Chancellor George Osborne's Autumn Statement, which he will deliver to MPs on Thursday.The shift on wind energy comes ahead of Chancellor George Osborne's Autumn Statement, which he will deliver to MPs on Thursday.
Other pre-statement announcements include:Other pre-statement announcements include:
Sources from both coalition parties said there had been so much investment in onshore wind and solar energy that they no longer needed so much state support.Sources from both coalition parties said there had been so much investment in onshore wind and solar energy that they no longer needed so much state support.
In contrast, they said, offshore wind sources still needed more subsidy to encourage long-term investment.In contrast, they said, offshore wind sources still needed more subsidy to encourage long-term investment.
Mr Alexander denied suggestions the move was in response to Tory MPs unhappy at wind farms being sited in their constituencies. Mr Alexander denied suggestions the move was a response to Conservative MPs' unhappiness at wind farms being sited in their constituencies.
Both Conservative and Liberal Democrat sources said the decision made good political sense because they would have a policy that countered the threat from UKIP which opposes all wind farms on principle. Both Conservative and Liberal Democrat sources said the decision made good political sense because they would have a policy that countered the threat from the UK Independence Party, which opposes all wind farms on principle.
Strike prices are set substantially above the current value of energy, as a form of long-term subsidy to encourage firms to invest. Strike prices - the amount the government guarantees to pay per unit of electricity - are set substantially above the current value of energy, as a form of long-term subsidy to encourage firms to invest.
One Conservative source said he expected "quite a dramatic cut" in prices for onshore wind in 2015 and beyond. Another spoke of the "beginning of the end for mature renewables".One Conservative source said he expected "quite a dramatic cut" in prices for onshore wind in 2015 and beyond. Another spoke of the "beginning of the end for mature renewables".
One source said: "We are in a very good place. If we didn't curtail onshore a bit, we would have so much onshore that the constraint wouldn't be financial but political. Ditto solar.One source said: "We are in a very good place. If we didn't curtail onshore a bit, we would have so much onshore that the constraint wouldn't be financial but political. Ditto solar.
"So constraining solar and onshore makes good value for money sense, it lets us move quicker than expected to market forces, and enables us to ensure that the one renewable technology that can go to scale in the 2020s - offshore wind - gets the early support that an immature technology needs." "So constraining solar and onshore makes good value-for-money sense, it lets us move quicker than expected to market forces, and enables us to ensure that the one renewable technology that can go to scale in the 2020s - offshore wind - gets the early support that an immature technology needs."
Energy Minister Michael Fallon said costs must be spread "much more fairly" Energy Minister Michael Fallon said costs must be spread "much more fairly".
'Spread more fairly' Downing Street denied that cuts in subsidies for onshore wind farms were in response to public concern that they were blighting the countryside.
Shadow chief secretary to the Treasury Chris Leslie told BBC Radio 5 live: "They're just chopping and changing all the time - very bad for stable, long-term investment." The prime minister's official spokesman said: "The decision was based purely on the falling cost of onshore wind farms".
Energy Minister Michael Fallon hinted at changing the policy in a speech earlier this week. But, for Labour, shadow chief secretary to the Treasury Chris Leslie told BBC Radio 5 live: "They're just chopping and changing all the time - very bad for stable, long-term investment."
He said: "We will also announce very shortly now the final support prices for each renewable technology. Of course new power has to be paid for and we should be open about that.
"But investment in renewables cannot be done at any price. It must be affordable for consumers. And the cost of that new investment needs to be spread more fairly, much more fairly."
The Energy Secretary, Liberal Democrat Ed Davey, had hinted at the more positive news for offshore wind energy in an interview with BBC Radio Humberside on Monday.
He said: "Later this week we will be announcing the final plans with our reform package, with what are called the strike prices, the prices that offshore wind developers would get, and I think that will be yet another shot in the arm of confidence.
"We have put in place a very attractive set of measure which will boost renewables, boost offshore wind and I believe bring green jobs to places like Hull."
Mr Davey also told MPs last week: "There will be some good news to announce on offshore wind shortly."
* Mr Osborne will update MPs on the state of the economy from 11:15 GMT on Thursday, with live coverage and analysis of the Autumn Statement on the BBC news website, BBC TV and radio.* Mr Osborne will update MPs on the state of the economy from 11:15 GMT on Thursday, with live coverage and analysis of the Autumn Statement on the BBC news website, BBC TV and radio.