BBC News

Cost of renewable energy subsidy on NI electricity bills 'could treble'

By John Campbell
BBC News NI Economics & Business Editor

media captionUnder the current system all renewable energy projects are guaranteed a subsidy, as John Campbell reports

Electricity consumers in Northern Ireland could see a threefold rise in the amount they have to pay to subsidise renewable energy, an official report has warned.

A typical consumer bill currently includes £17.25 a year for renewables support.

The report by the Department of Enterprise says this could increase to more than £50 a year by 2020.

That is because of a UK-wide change in the subsidy system.

Until now, it has disproportionately benefited Northern Ireland.

The report also warns that the Stormont Executive's target of having 40% of electricity generation from renewables by 2020 could be "unachievable."

That is also related to the major change in how renewable energy projects, like wind and solar energy, are subsidised.

Around 20% of electricity in Northern Ireland is now generated from renewable sources.

Under the current system all renewable energy projects are guaranteed a subsidy.

That system is ending in 2017, to be replaced by one in which there is UK-wide competition for subsidy payments.

Renewable development will take place within the UK wherever it is most economic.

There will therefore be no guarantees about how much subsidy will be allocated to Northern Ireland generators.

'Difficult questions'

The report states: "This also means that there is no basis for the Executive to set a NI renewable target. Instead it would contribute to the UK target.

"Despite the commitment to the 40% target by 2020, there is no EU driver for this."

The change in the subsidy scheme means that even if the 40% target is abandoned consumers will still have to pay more.

The report says that the maximum net benefit to the Northern Ireland economy is achieved at 25% renewable generation.

It adds that "increasing deployment above 25% is still positive for the economy but the net benefit declines with increasing deployment".

Enterprise Minister Arlene Foster said the new subsidy scheme raises "difficult questions for Northern Ireland" in terms of cost to consumers and the ability to operate a devolved energy policy.

The consultation closes for responses on Friday, 8 May 2015.

Related Topics

  • Renewable energy
  • NI economy