Labour's fair wind for green energy

Brian Wilson, the energy minister, is to propose reforms of the electricity trading system to promote generation from environmentally friendly sources.

Mr Wilson is worried that Neta, the electricity trading market, which is a year old on Wednesday, disadvantages wind farms and Combined Heat & Power (CHP) sources.

To be announced within two weeks, Mr Wilson will outline a series of initiatives to benefit small electricity generators.

Mr Wilson told The Independent on Sunday: "We still have to find a balance with Neta, which helps bring the price of electricity down, and other government objectives such as future investment in new generation and meeting our environmental targets."

The minister added: "It is increasingly clear that some forms of generation have been adversely affected. CHP is suffering, though Neta is not the only factor. There is no point in having targets if what is happening in the real world is driving investment away. That is not joined-up Government."

Mr Wilson is expected to announce:

* New grants for the preparation of applications for small generators.

* A revised cost system for accessing the National Grid, skewed in favour of green generators.

* A new system of penalties, for miscalculating energy out-put into the grid.

Under its "renewable obligation", the Government is com- mitted to creating a £1bn green energy market by 2010. If it achieves this aim, 10 per cent of electricity will be produced by renewable sources.