Chancellor to block wind projects that do not cut electricity prices

Chancellor John Healey announced on Wednesday that the government will reject new offshore wind projects if they fail to lower household energy bills. He stated that ministers will only approve subsidy contracts for projects where the generated power can be fully absorbed by the electricity grid without increasing costs for consumers. The decision aims to prevent the financial burden of disconnected renewable energy from falling on ratepayers.

Healey explained that clean power is the method for breaking the influence of international gas prices on domestic bills. However, he emphasized that the transition must occur at the correct pace and in appropriate locations where the grid infrastructure can support the load. He wrote in The Times that there is no logic in building power that cannot connect and then paying to switch it off. The next renewables auction will follow this rule, purchasing only projects that reduce bills while enhancing energy security.

The announcement follows a budget that included over £3 billion in cuts to the energy department, with a large portion of those savings funding higher defense spending. These reductions have raised concerns among experts that the UK is moving away from its target of clean power by 2030. Critics view the budget moves as a dismantling of the green agenda previously led by former energy secretary Ed Miliband.

A key driver for the new veto policy is the cost of curtailment, where wind turbines are paid to stop operating due to a lack of grid capacity. The National Energy System Operator, which is funded through energy bills, currently manages this process. A National Audit Office report from September warned that homes and businesses could face an additional annual bill of £7.8 billion by 2030 to address these inefficiencies.

Healey addressed potential criticism by stating that the move is not a retreat from clean power but a credible route to it. He argued that cheaper electricity will make it easier for businesses and households to electrify, thereby strengthening energy security and helping decarbonize the wider economy. He noted that without recent renewable generation, this year's gas price shock would have hit families and firms even harder.

One major casualty of the budget cuts is the government's heat pump subsidy scheme. The reduction in available funds threatens the ambitious goal of installing 250,000 heat pumps annually by 2030. Currently, about 60,000 units are fitted in existing homes each year, with households able to claim £7,500 toward the cost. The government had planned to increase the scheme's funding from £400 million this year to just over £700 million by 2029 and 2030, but the budget trimmed £741 million from the boiler upgrade plan.

Allies of former energy secretaries Ed Miliband and Miatta Fahnbulleh insist the government's green agenda remains strong. They pointed out that Healey also announced a long-term shift to move green costs away from energy bills and onto taxpayers, a policy both former secretaries championed. The cuts to the energy department will largely fund the defense investment plan unveiled on Wednesday.