Renewable Energy: Finance

(asked on 7th January 2019) - View Source

Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what estimate he has made of the cost of supporting renewable generation over the next five years; and what assessment he has made of the potential merits of increasing the level of renewable levy exemptions available to UK steel producers.


Answered by
 Portrait
Claire Perry
This question was answered on 15th January 2019

The Office for Budget Responsibility published estimates of the costs of renewable generation at time of the Budget. Please see table 2.7 of the Supporting document entitled ‘October 2018 Economic and fiscal outlook – supplementary fiscal tables: receipts and other’.

Eligible energy intensive businesses in the UK receive relief from up to 85% of the indirect costs of support for renewable electricity deployment through the Contracts for Difference, Renewables Obligation and small-scale Feed-in Tariff schemes. State aid rules set out that any additional relief above 85% must be limited to an amount that is determined by the business’s Gross Value Added (GVA). A decision to provide additional relief would therefore lead to companies producing the same product receiving different percentage levels of relief depending on their GVA. The Coalition Government consulted on providing additional relief from the indirect costs of renewable electricity as allowed under the state aid rules, but concluded that to do so could distort competition in the UK market. The Government keeps this assessment under review.

Relief from renewable electricity costs is part of a wider package of measures to reduce the cumulative impact of energy and climate change policies on industrial electricity prices for key energy intensive industries. This includes a package of compensation for these industries worth over £850 million since 2013, of which more than £270 million has been provided to the steel sector.

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