Spending watchdog criticises ministers over £16bn renewable energy deals
Posted on Feb 2, 2016
The National Audit has criticised ministers for awarding companies such as SSE, Drax handed benefits to corporate power providers providers at the expense of consumers by awarding £16.6bn of renewable energy contracts without putting them out to competitive tender according to the Gaurdian newspaper.
A parliamentary spending watchdog warns today that the government may have handed benefits to corporate power providers at the expense of consumers by awarding £16.6bn of renewable energy contracts without putting them out to competitive tender.
Eight contracts awarded to companies such as SSE and Dong Energy will provide only 5% of the 20% energy reduction target.
The criticism from the National Audit Office came as statistics released by the Department of Energy and Climate change showed that a fifth of all electricity was generated in Britain by solar, wind and other green technologies in the first three months of the year to 18.1 terrawatt hours, enough for 15m homes and up 43% on the same period of 2013.
The audit office said that it understood the department gave the early green light to five offshore wind farms and three biomass projects to keep up the pace of “green” investments to meet EU energy targets before the introduction of a new “contracts for difference” subsidy regime next spring.
Over £10bn could be paid in incentives for non-domestic biomass boilers despite a government study showing they are less efficient than thought and won’t help the UK meet clean energy targets.
The UK has pushed biomass boilers as a technology to help meet an EU target of getting at least 15% of its energy from renewable sources by 2020, incentivising businesses and individuals to switch to them in return for payments under the RHI.
But “under-performance appears widespread in the UK biomass heat sector,” the paper admits, adding that the efficiency shortfall “also means emissions will be higher than laboratory test results suggest”.
Just £128.9m had been paid through the RHI as of November 2014, but the final cost in public money could be over £10bn because those installing biomass boilers under the scheme receive annual payments for several years, Decc’s own impact assessment shows. So far, most RHI payments appear to have been banked by wealthy landowners.
To be promoted as a renewable source of energy, the biomass boilers need to have a 85% efficiency rate for converting fuel to energy – but the Decc study reveals the average efficiency rate of installed boilers was 66.5%.
The target rate may be unreachable, as the report found that the biomass heating systems surveyed “can only achieve levels around 76% (on average)”.
Yet no field studies of biomass boiler efficiency were carried out before the RHI’s introduction because Decc viewed biomass as an established and internationally successful technology.
US electric carmaker Tesla Motors aims to move into the energy sector as it launches batteries that can power homes and businesses as it attempts to expand beyond its vehicle business. D-ENERGi director Zico Ahmed said “This is really an exciting innovation within the energy sector, the battery device would allow consumers to get off the power grid or bring energy to remote areas that are not on a grid.” Tesla plans to start shipping the units to installers in the US by this summer, and plans are underway for a launch in the UK early next year. In a highly anticipated event near Los Angeles, Mr Musk said the move could help change the “entire energy infrastructure of the world”. “Tesla Energy is a critical step in this mission to enable zero emission power generation,” the company said in a statement. The rechargeable lithium-ion battery unit would be built using the same batteries Tesla produces for its electric vehicles, analysts said. The system is called Powerwall, and Tesla will sell the 7kWh unit for $3,000 (£1,954), while the 10kWh unit will retail for $3,500 (£2,275) to installers. Energy comparison firm USwitch estimates that one kWh can power two days of work on a laptop, a full washing machine cycle or be used to boil a kettle 10 times.