John Healey has said the government will only buy renewable energy projects that can lower bills at its next auction, in a move the Times and the Guardian have reported as a decision to veto new clean energy projects, including offshore wind farms, that fail that test.
Writing in the Times on Saturday, the chancellor said there was "no sense building power that can't connect and then paying to switch it off". He said clean power is "how we break the grip of international gas prices on our bills", but that the shift towards it "has to come at the right pace, in the right places, with the grid to carry it".
The article comes three days after Healey's Budget, which announced a cost control framework for energy and cut more than £3bn from the energy department's budget, according to the Guardian. The paper reported the latest statement as adding to concerns that the government is moving away from its pro-renewables agenda.
"We will take that approach into our next renewables auction, only buying projects that can lower bills while strengthening our energy security," Healey wrote. "We'll be hard-headed about what we build," he added.
The word "veto" is the newspapers' characterisation rather than the chancellor's. Healey's own words describe how the government will choose which projects to back in the next Contracts for Difference auction, through which ministers award subsidy contracts to developers, and he did not set out any new legal power to block schemes.
Nor did he say which auction he meant. The application window for the eighth round, known as AR8, closed in August. Netzeroinvestor reported that the new rules were unlikely to affect projects already in that round but could shape the budgets set for it, which the outlet said were due next month.
The principle itself was in Wednesday's Budget. Netzeroinvestor reported that Healey announced a framework under which the government "will only buy and build new generation projects that can connect to the grid and lower bills". The Budget document, as quoted by Carbon Brief, commits the government to introduce a "comprehensive cost control framework (CCF)" at the 2027 spending review "to ensure government action drives bills down over the next 10 years".
The policy turns on the cost of wind power that the grid cannot carry. The National Energy System Operator pays wind farms to switch off when their output cannot be transmitted, pays other generators to replace them, and recovers the cost through energy bills.
Octopus Energy's Wasted Wind tracker, a campaigning tool run by the supplier rather than an official statistic, put the cost of managing this on Tuesday at more than £47m, a single-day record. That figure comprised almost £7m paid to wind farms to stop generating and more than £40m paid to gas plants and other generators to make up the shortfall.
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, a non-profit organisation, told the Times the government did not have to choose between delivering power that was either clean or low-cost, because renewables delivered both. "Britain's wind farms lowered wholesale power prices by around a third last year," she said.
Adam Bell, a former government energy official now at PF Global, told the Times ministers might "end up trying to favour those [wind] projects that have later delivery dates". He said: "You can start saying things like, for projects in particular parts of the country behind these constraints, we would only look at projects that have a delivery date after a particular connection has been delivered."
The statement follows remarks by Miatta Fahnbulleh, the energy secretary, who told the Times in August that the government would not stick rigidly to its pledge of 95% clean power by 2030 if that risked higher household bills. Fahnbulleh took over the department in July when Ed Miliband, the author of the 2030 pledge, became foreign secretary under the new prime minister, Andy Burnham.
The Times and the Guardian both described Saturday's article as a shift from that pledge. Healey, according to the Times, described the changes as a "credible route to it" rather than a retreat.
The Budget also removed £741m from the Boiler Upgrade Scheme, the Guardian reported, as part of the wider energy department cuts. The Red Book says £4.7bn of the Defence Investment Plan will be funded by "reprioritisation of capital budgets" across Whitehall, Civil Service World reported, with Healey thanking colleagues for "prioritising within their department budgets in the face of tough fiscal constraints".
Details of how the cost control framework will operate are due at next year's spending review.
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