Energy crisis deepens as wind farm ‘loophole’ could add £300 on household bills 

Experts have warned that a net-zero “loophole” in energy contracts could lead to Britons paying £300 in household bills.

In an effort to the UK’s vulnerability to the fluctuations of the global wholesale fossil fuel energy markets, Britain has stepped up its renewable energy generation ambitions. In the Government’s Energy Security Strategy, the UK committed to delivering up to 50GW by 2030, including up to 5GW of innovative floating wind. However, a group of campaigners have warned that energy firms who are currently building wind farms, could exploit loopholes that could add another £300 to household energy bills.

Net Zero Watch, a campaign group that scrutinises climate policies, have warned that if energy firms decide to exploit the system by postponing contract start dates due to soaring energy prices, consumers could collectively pay a further £8billion per year.

Two energy companies that struck contracts with the Government to build wind farms have postponed the start of the project.

The firms had previously agreed on a fixed rate to generate electricity, but since the start of the project is postponed, soaring energy prices could mean that UK consumers could pay additional hundreds of millions of pounds in energy bills.

Net Zero Watch argues the loopholes in the system incentivise energy firms to enter similar contracts, instead of paying back the sums they received from the taxpayer for not starting when planned.

According to the campaigners, if all of the energy firms with contracts due to begin before 2028 decide to postpone the start of the deals, it would lead to consumers paying up to £8billion per year more than expected, or £300 per household.

The group also said that approximately 70 percent of the £8billion figure would come from wind farms project that may postpone their contracts, while 25 percent is linked to nuclear.

This comes as Business Secretary Kwasi Kwarteng slammed energy firms who are considering this move.

He said that developers that postpone the start dates of “contracts for difference” (CFDs) in order to profit from record energy prices are “undermining the renewables scheme and not behaving within its spirit”.

In order to incentivise companies to build renewable energy projects in the UK, the Government promises a guaranteed price to firms for their electricity, through CfDs with individual wind farms and nuclear power plant owners.

Craig Mackinlay, the chairman of the Net Zero Scrutiny Group of MPs, said: “The Government says it is looking into fixing this problem, but it will be years before households see the results; in the meantime, bills are going to be hundreds of pounds higher.

“Hard-pressed families need lower bills now, not in 2028.”

The group calculated this £8billion figure using an average market price of electricity of £200 per megawatt-hour (MWh), based on the cost in the first quarter of 2022.

Russia’s invasion of Ukraine over the past few months has pushed energy prices to a record high of £250 per MWh in March.