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The funds for low carbon generation under the Levy Control Framework (LCF) are set to run out quicker than expected, according to Aurora Energy Research.
A study on future power prices suggests they will fall quicker than the Department of Energy and Climate Change (Decc) has estimated.
A chart published in March by Decc predicted power prices to be £68/MWh in 2020 and £80/MWh in 2030.
However, Aurora predicted these prices would be £46/MWh in 2020 and £41/MWh in 2030.
John Feddersen, Aurora Energy research’s chief executive, told Utility Week that because the contracts for difference (CfDs) will use the reference price based on government figures, the amount needed to top-up actual power prices to the strike price, will increase.
“If the power price is lower than anticipated, expenditure is higher than anticipated,” he said.
Feddersen added that this would result in the government procuring lower amounts of renewable generation capacity than projected, and the additional costs being passed on to consumers.
Decc stated it remained “confident the LCF can deliver the levels of low carbon electricity set out in the delivery plan” published in December 2013.
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