Conservative response to AR7 wind auction

Claire Coutinho MP, Shadow Energy Secretary, said:

“Ed Miliband is loading more and more wind and solar on to the grid before the grid can handle it, that's why we will be paying £8bn through are (sic) bills to wind and solar developers simply to turn off by 2030.

“The true cost of this power, once you add in network charges and back up is far higher, so all this will do is make our electricity even more expensive.

“For a stronger economy and better living standards, we need to make electricity cheap. Cheaper electricity would also make electric heating and cars more appealing so it's actually better for decarbonisation too. That's why the Conservatives have a Cheap Power Plan to cut electricity bills by 20% now.”

ENDS

Notes to editors:

Key changes from AR6 to AR7:

• The government has extended Contracts for Difference (CfD) from 15 years to 20 years. The government has increased the length of new CfD contracts from 15 to 20 years for fixed-bottom offshore wind, floating offshore wind, onshore wind and solar technologies (DESNZ, Consultation outcome, 15 July 2025, link).

• The government has relaxed eligibility requirements to allow some offshore wind projects to apply for a CfD while awaiting planning consent.Fixed-bottom offshore wind projects can now apply for a CfD while awaiting planning consent (DESNZ, Consultation outcome, 15 July 2025, link).

• The government has increased the strike price for some CfD's. The government has increased the administrative strike price, the maximum possible amount companies can bid, for a range of CfD's including offshore wind which was increased by 11 per cent, floating offshore wind which has increased by 10 per cent and hydro which has increased by 19 per cent. For a full breakdown please see the annex (DESNZ, Consultation outcome, 15 July 2025, link).

• Earlier this year, the government launched the Clean Industry Bonus which provides additional funding for offshore wind if applicants choose to invest in more sustainable supply chains. The CIB window for AR7 opened on in February and closed in April 2025 with £544 million allocated (DESNZ, Contracts for Difference CIB, 6 October 2025, link).

Ed Miliband is locking us all into paying higher prices for longer because of his reckless and impossible clean power 2030 targets:

• The government is locking Britain into longer CfDs meaning that bills will be higher for longer to pay for net zero. The government is extending the length of CfDs from 15 to 20 years, meaning that regardless of whether the country wants or can afford net zero, Britain will be locked in paying more for longer, increasing bills (DESNZ, Consultation outcome, 15 July 2025, link).

• British households have already paid £8,000 in net zero subsidies which Ed Miliband is just going to increase. Research by the Renewable Energy Foundation has found that since 2002, electricity subsidy schemes have amounted to £220 billion, equivalent to £8,000 per household. In 2023, the annual subsidy cost £25.8 billion per year (REF, Renewable Electricity Subsidy Totals, 28 April 2025, link).

Annex:

1. BEIS, Contracts for Difference: AR5, December 2022, link.

1. DESNZ, Contracts for Difference: AR6, November 2023, link.

1. DESNZ, Contracts for Difference: AR7, July 2024, link.

High energy bills are pushing families into poverty and making British industry uncompetitive:

• Britain's domestic energy prices are the second highest in the world. Official figures published by DESNZ show Britain's domestic energy prices are the second highest in the world – behind only Germany – at 30.45p per kWh. In France, the equivalent price was 23.7p, while in the US it was 12.9p. (DESNZ, Energy Prices: International Comparisons, 30 September 2025, link).

• Britain's industrial electricity prices are the highest in the world. On price per kWh, Britain's electricity prices are the most expensive in the G7 and EU and 46 per cent higher than the median. Industrial electricity prices are four times as expensive as the US and 50 per cent more expensive than France and Germany. (DESNZ, International Industrial Energy Prices, 30 September 2025, link).

Net Zero has increased our energy bills:

• Almost half of the cost of producing electricity in Britain is a result of Net Zero spending, taxes and levies. Research by the Renewable Energy Foundation found that the equivalent of 40 per cent of the cost of producing electricity in Britain, £22 billion a year, is paying for the costs of renewables and Net Zero, including various renewable subsidies, the Carbon Tax, backup for when renewables cannot generate power, paying wind farms to switch off when it's too windy, and the cost of building the pylons required to connect renewables to the grid. All of these costs are recovered through our energy bills. (Renewable Energy Foundation, UK Renewable Electricity Subsidy Totals: 2002 to the Present Day, accessed 26 September 2025, link).

• The National Energy System Operator report estimates that reaching net zero could cost over £4.5 trillion over the next 25 years, including around £585 billion for household heating upgrades, £1 trillion for new wind and electricity networks, and £2.6 trillion for electric vehicles and charging infrastructure, requiring annual investment of roughly £182 billion to meet climate targets (National Energy System Operator, FES 2025 Economics Annex, p. 24, 11 December 2025, archived; Times, 11 January 2026, link).

• A third of the wholesale price of electricity is the Carbon Tax. The Carbon Tax, comprised of the Emissions Trading Scheme and Carbon Price Support, accounts for around 30 per cent of the wholesale cost of electricity. Both the Climate Change Committee and the Department for Energy Security and Net Zero accept that the Carbon Tax increases the wholesale price of electricity. This is a policy choice designed to aid the transition to Net Zero. (Ember, European electricity prices and costs, accessed 26 September 2025, link; Climate Change Committee, Energy Prices and Bills: Annex, March 2017, link; DESNZ, Form, 19 September 2025, link).

• The Renewable Obligation subsidy scheme has increased electricity bills by over £67 billion. Families and businesses have spent at least £67 billion subsidising renewables through the ROC scheme since 2002. (Ofgem, Renewables Obligation: Annual Report, March 2025, link).

• Ed Miliband's decision to double the subsidies for offshore wind in 2008 means many wind farm developers are paid almost three times the market price for their output. The average wholesale electricity price in 2024 was around £72 per MWh. The ROC subsidy rate is £67.06 per ROC. Many offshore wind farms are entitled to two ROCs per MWh on top of the market price, meaning they are paid £206 per MWh for every unit of electricity. For comparison, the cost of electricity from gas without a Carbon Tax is around £55 per MWh. (Ofgem, Renewables Obligation, 18 February 2025, link).

The Conservatives will Axe the Carbon Tax, scrap Ed's extortionate wind handouts, and repeal the Climate Change Act to cut energy bills:

• The Conservatives will repeal the Climate Change Act 2008. The Climate Change Act established legally binding, five-yearly carbon reduction targets. These policy changes would likely not be possible if we had to stick to our legally binding climate targets under the Act. This is proof that the Climate Change Act forces Ministers to make decisions that increase the cost of energy and make people poorer. (Climate Change Act, accessed 26 September 2025, link).

• The Conservatives will axe the Carbon Tax for electricity generation, saving families £75 a year. The Carbon Tax (the Emissions Trading Scheme (ETS) and Carbon Price Support (CPS)) will be scrapped for electricity generation. This will reduce wholesale electricity prices by around 30 per cent, or around £26 per MWh, saving households £75 per year on their electricity bills. The ETS and CPS are taxes that are charged on gas power stations when they generate electricity, which are passed straight through to households and businesses in their energy bills. (Conservative Party Analysis of DESNZ and LCCC data, 26 September 2025, available on request).

• The Conservatives will scrap Ed Miliband's extortionate old renewable subsidies, saving families £90 a year. The Renewable Obligation Certificate (ROC) scheme pays subsidies to wind and solar farms and other renewable generators, who are paid up to three times the market price of electricity. These subsidies are paid by every household and most businesses through their electricity bills. The ROC subsidies are reliant on primary legislation, meaning they can be stopped at any point. Scrapping this would save households £90. (Ofgem, Policy cost allowance methodology, accessed 26 September 2025, link).