Telegraph

Green power subsidies are misguided, says Ofgem
By Tessa Thorniley (Filed: 14/02/2004)

Energy regulator Ofgem has attacked Government plans to extend subsidies for renewable power generators saying they are "unnecessary and misguided" and will push up consumers' bills.

  
Yesterday, Sir John Mogg, chairman of Ofgem, expressed disappointment at government plans to amend the Energy Bill, allowing a reduction in transmission charges for renewable energy generators in peripheral areas.

He said: "It will mean renewable generators will pay less to transmit their electricity through the national grid than traditional generators."

Ofgem estimates that the Government's Renewables Obligation trading scheme is already providing £485m of additional financial support to companies generating power from renewable sources such as wind farms.

Under the scheme suppliers must buy an increasing amount of their power from renewable sources, with the higher costs passed on to customers. Sir John said customers' bills will inevitably rise "for no clear benefit" if the amendment is passed.

The regulator has supported proposals within the Bill, which will create a single UK electricity market - known as Betta - under which, generators pay for transmission based on how far the power is transported.

A spokesman for the Department of Trade and Industry said: "Renewable generators in peripheral areas of Scotland would have to meet the highest transmission charges."

The number of wind farms in Scotland - the windiest place in Europe - is expected to rise by 80pc over two years, as the Government struggles to meet its target of generating 10pc of electricity from renewable sources by 2010, rising to 15pc by 2015.

But Ofgem said there is no evidence the proposal will encourage further development of renewable sources. And it warned Government intervention "may increase risk to companies and discourage future investment".

His comments came as Scottish Power said it had won approval to build the UK's largest onshore wind farm on a site 20 miles west of Edinburgh - with 62 turbines able to power 80,000 homes.