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European Commission expected to block UK renewable subsidies

European climate action commissioners say state aid for renewable technologies should be phased out by the end of the decade, the Telegraph has reported.

Taxpayer support for solar energy must also be cut, the commission will say.

The commission, which oversees the European single market, is preparing to argue that the onshore wind and solar power industries are “mature” and should be allowed to operate without support from taxpayers. Under the single market rules, European Union governments are forbidden from providing long-term “state aid” to domestic industries that can function without support.

A Government source said European officials have privately warned ministers that they must reduce public support for onshore wind and solar generators.

Although Conservative ministers sometimes criticise the EC for its interference in domestic matters, they are understood to be keen to cooperate in the case of renewable energy subsidies.

The operators of onshore wind turbines get subsidies that increase the price they are paid for the power they generate.

Wholesale energy prices are typically about £55 for a megawatt hour of power. But onshore wind generators are paid about £90. Ministers have started reducing those subsidies, cutting tariffs applied to household bills and slashing guaranteed prices for onshore wind.

But pressure from the EC is expected force the Coalition to introduce a less generous system of support for onshore wind and solar power.

That new regime, which could be in place in less than two years, will see wind farm operators competing with each other for a share of a reduced pool of public subsidies. Ed Davey, the Energy Secretary, said earlier this month he was preparing to announce that onshore wind and solar farm developers would be forced to compete to secure government subsidies.

The commission is expected to announce the results of a review of support for renewable energy as soon as later this month.

Despite British enthusiasm for reducing subsidies, politicians in other EU states may resist pressure to withdraw public support for renewables.

Policy Exchange, a think tank with close links to the Conservatives, has called for steep cuts in subsidies, which would eventually reduce household bills.

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