£1.2bn boost for renewable energy under Contracts for Difference

Renewable energy developers will be able to compete for subsidies running to up to £200 million a year under UK Government reforms to the energy market.

The Department for Energy and Climate Change has announced a total of £1.205 billion will be available under its Contracts for Difference scheme in the coming six years.

The system guarantees a minimum buying price to generators, reducing risk and encouraging them to commit to the major infrastructure investment required to get large power schemes off the ground.

Some £205m will be made available in October, with £50m for proven technology like onshore wind and solar and £155m for less established generation including offshore wind.

At least £50m will be up for grabs the following year, with around £1bn expected to be pumped into the sector, including carbon capture and storage, by 2020.

It is expected the reforms will cut emissions from the energy sector and see bills cut by around 6% by 2031.

The budget estimate follows European Commission approval of the scheme under state aid rules. Discussions between Whitehall and Brussels continue over an additional uplift for projects in the remote Scottish Islands.