U.K. Botched Its Renewable Energy Programs, Auditors Report

EghtesadOnline: The U.K. government miscalculated the costs of renewable-energy support and is likely to overshoot its 7.6 billion-pound ($9.2 billion) annual budget by about a fifth in 2020 and 2021, according to auditors.

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19 October 2016

The “government’s forecasting, allocation of the budget and approach to dealing with uncertainty has been poor, and so has not supported value for money,” Amyas Morse, head of the National Audit Office, said Tuesday in an e-mailed report.

The support mechanism, known as the levy control framework, was established by the U.K.’s Department of Energy & Climate Change, subsequently renamed by Prime Minister Theresa May’s government to the Department of Business, Energy & Industrial Strategy. It sets annual caps on costs for clean energy such as feed-in tariffs, renewable obligation certificates and contracts for difference.

According to Bloomberg, the audit cited revised framework costs of 9.1 billion pounds between 2020 and 2021. That would add 110 pounds to a typical household dual-fuel energy bill, about 17 pounds more than if it had remained within budget.

The U.K.’s generous subsidies for renewables resulted in a rapid build-out of solar and wind farms. The overcast northern European country has 9.2 gigawatts of solar farms installed, according to data from Bloomberg New Energy Finance. The government reduced those programs in 2015 and ended one for onshore wind a year early.

Most of the allocated government funds have been spent and there is little left over to fund new projects between now and 2021. It would have been more cost effective to spend more of it later as technologies such as wind turbines and solar panels are much cheaper now than they were a few years ago, the auditors said.

The levy control framework has also failed to adequately support investor confidence in the sector, they said. Issues include the “short and decreasing timeframe and a lack of transparency over forecasts and how the budgetary cap would operate.