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Government Accused Of Overpaying For Green Energy Contracts

Written by at 12:36

green energy contracts

The UK government has been criticised for spending approximately £16.6 billion on long-term green energy contracts, without seeking the best value for money.

According to the National Audit Office (NAO), the government failed to act in the interest of bill payers when it was awarding the contracts “without price competition”.

Offshore Wind Farms...

The funding has been offered to offshore wind farms in Cromer, East Yorkshire, Walney Island, Outer Moray Firth and Liverpool Bay. Other projects approved include biomass conversion units in Selby and Northumberland, and a biomass heat and power plant in Middlesbrough.

Biomass energy is the process by which carbon is extracted from plant based and animal based organisms. It promotes energy efficiency by offering an alternative to fossil fuels, which are in limited supply.

Green Energy Contracts...

The green energy contracts were awarded as part of an EU directive which aims to improve energy efficiency across Europe by 2020, and encourage governments to focus on green energy solutions.

The UK government has committed to producing 30% of its energy from renewable sources by 2020, but the £16.6 billion contracts represent just 5% of that goal. The NAO has pointed out that this early funding represents 58% of the government’s total green energy budget.

However, a government spokesperson argued that the green contracts will help to provide as many as 8,500 jobs and £12 billion in private investment, as well as bringing the UK closer to meeting its clean energy goals for 2020.

Money Misspent?

NAO spokesperson Jill Goldsmith voiced concern that the £16.6 billion investment will limit the amount of money available for spending in the next round of green energy investment.

However, the Department for Energy and Climate Change (DECC) claimed that it was under pressure to lock green energy suppliers into long-term contracts now in order to save money and improve the nation’s overall energy efficiency within the EU’s targets.

The government’s upcoming’ Contracts for Difference’ system is set to make the green energy market more competitive by asking energy firms to bid against market prices for major government contracts. However, this system is not due to be introduced until April 2015.

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