Perry defends exclusion of onshore wind from CfD auctions

Claire Perry has insisted the ongoing lack of government support for new onshore windfarms will not “impede” the UK’s ability to meet its renewable energy targets.

The energy and clean growth minister was quizzed by the Business, Energy and Industrial Strategy Committee yesterday afternoon (21 November) about the exclusion of onshore wind and solar from Contracts for Difference (CfD) auctions. The committee was conducting a hearing on progress on the clean growth strategy published just over a year ago.

The minister defended the government’s policy, which was enshrined in the Conservative party’s 2017 general election manifesto, telling committee three times she does not believe in breaking promises to the electorate.

“We were elected on a manifesto with a commitment and I believe in keeping commitments,” said Perry.

“It does not impede our ambition with our renewable targets and it has allowed us to focus on an industry that is delivering increases in yields and cost reductions.

“If we look at what the offshore wind industry has achieved in terms of cost reduction you have an industry that is behaving more like a tech industry than a mechanical engineering industry.”

Earlier this week, the Department for Business, Energy and Industrial Strategy (BEIS) revealed up to £60 million of annual subsidies will be allocated in next year’s pot 2 CfD auction for less established technologies such as offshore wind.

Ashley Ibbett, director for clean electricity at BEIS, told MPs that despite a fall in the budget compared to previous rounds, the government is on track to meet its target of delivering between one and two gigawatts of new renewable capacity through the auction: “Wholesale prices have gone up so the amount we need to put into the budget has gone down.”

“We shouldn’t define success and ambition by how much subsidy we put in,” said Perry, adding that no decision has been taken on how the remainder of the £557 million earmarked for future pot 2 auctions will be divvied up between rounds.

She left the door open to fencing off some of the funding for technologies that are less mature than offshore wind but said the desire to support advances had to be balanced with ensuring value for money: “If the purpose of this subsidy is to maximise the purchase of zero carbon energy, it’s hard to defend if we could buy lots of it from one technology.”

Perry also defended the government’s claim it will be able to meet more than 90 per cent of its carbon reduction targets in the fourth and fifth carbon budgets, which cover the decade leading up to 2032, through existing policies.

MPs probed her on the Committee on Climate Change’ estimate that around 40 per cent of carbon savings are unaccounted for under existing policies.

Perry said the numbers are not “fallacious” and have to be seen in the context of the “dynamic changes” taking place in the energy mix.

And she insisted that the government’s request to the CCC to explore what it must do to help deliver the Paris climate change agreement’s goal of limiting global temperature rises to 1.5 degrees above pre-industrial levels is “not a cosmetic exercise”.

Ibbett said the government is “confident” there is sufficient capacity in place for this winter ahead, despite the recent suspension of the capacity market.