The Government will open the door to multi-billion pound investment in off-shore renewable energy supplies as part of plans to boost major infrastructure projects in the UK.
Ed Davey, the Energy Secretary, is expected to announce the price subsidy that the Government will pay to electricity suppliers who agree to invest in green energy generation over the next five years.
Last night Whitehall sources said that the Treasury had agreed to pay a substantial premium for green energy projects which, they claimed, would unlock billions of pounds worth of private investment in new wind, wave and tidal generation projects. But at the same time the Conservative Energy Minister Michael Fallon will release details on the latest projections for shale gas in the UK from the British Geological Survey. This is expected to show larger than expected potential shale gas reserves that will benefit from new Government support.
The announcement on energy will form part of co-ordinated announcements on how more than £100bn of public money will be spent on energy, transport and housing projects over the next five years. Around £50bn of this will be spent by 2015. A further £200bn will be allocated by the end of the decade.
Other areas of capital spending to benefit will be transport, science and schools. The Department for Transport’s capital budget will rise to £9.5bn a year to pay for what George Osborne described as the biggest investment in roads for 50 years. In London, investment will rise to £1bn a year, with a commitment to start work on scoping the new north/south Crossrail 2 project.
Money will also be spent on science, which will see its capital budget increase from £0.6bn to £1.1bn. There will also be commitments to new flood defences.
However Labour said the promises rang hollow, claiming that work had begun on only one of the 261 schools in need of rebuilding or refurbishment, and just seven of 576 major infrastructure projects had been finished, with 80 per cent not yet begun.
Ed Balls, the Shadow Chancellor, said the announcement was a “con” as it contained no new money for infrastructure on top of the amounts announced in the Budget earlier this year.
Discussions between the Department of Energy and Climate Change and the Treasury over the degree of subsidies for nuclear and renewable generation are understood to have gone up to the wire. However a Liberal Democrat source said they were “happy” with the settlement, due to be announced today, which they said would provide the financial security to unlock new investment in renewables.
n Meanwhile the Transport Secretary Patrick McLoughlin told the House of Commons that the budget for the HS2 railway, intended to link London to Birmingham by 2026, had increased by nearly £10bn to more than £40bn. Mr McLoughlin said the new projected cost of £42.6bn, up from £33bn, would include a large “contingency” fund of £14.4bn. He said the final cost could be lower than the new estimate, but said revising the figure was “right”.