Question

To ask Her Majesty’s Government what is the current cost per kilowatt hour of public subsidies for (1) oil, (2) gas, (3) coal, (4) nuclear, and (5) wind solar, power stations.

The Government currently does not provide subsidies to oil, gas, coal or nuclear power stations.

The ring fence tax regime for oil and gas does include allowances, such as the Investment Allowance, which are designed to reduce the impact of the supplementary charge ensuring otherwise economic investment is not uncommercial. Upstream companies continue to pay Ring Fence Corporation Tax at a rate of 30% (which is higher than the 20% mainstream rate of Corporation Tax rate paid by other sectors).

Top up payments provided through Contract for Difference (CfD) and Capacity Market (CM) are expected to come online in the next decade and therefore do not count towards current levels of subsidy. Please note that these payments have been awarded on a competitive basis and are technology neutral.

In relation to successful technologies of the Capacity Market auction, such as coal, gas, and existing nuclear, payments for 2018/19 have been awarded at £19.40/kW. CM payments are to provide revenue certainty to capacity providers that in a perfectly functioning energy market and absence of a CM would have accrued to them in any case. Therefore CM payments are certainty over future revenues rather than subsidy as such.

In relation to the nuclear power station at Hinkley Point C, the first nuclear CfD is expected to come online at the start of the next decade. The strike price for Hinkley Point C was agreed and announced in 2013. It has been set at £92.50/MWh fully indexed to the Consumer Price Index.If the final investment decision is taken on Sizewell C, the Strike Price for Hinkley Point C will be reduced to £89.50/MWh, on the assumption that EDF will be able to share first of a kind costs of EPR reactors across Hinkley Point C and Sizewell C sites.

Wind and solar technologies are currently subsidised through the Renewables Obligation and the Feed-in-Tariff, which respectively support large scale and small scale renewable generation. In Northern Ireland there is no Feed-in-Tariff and the Renewables Obligation subsidises both large and small scale renewable generation.

The current solar PV and wind subsidy levels for the Renewables Obligation (RO) are set out in the table below. These figures reflect the current 2015/16 banding levels, they are based on a Buy-out price of £44.33 per RO certificate, and are expressed in 15/16 prices.

The current solar PV and wind subsidy levels for the Feed-in-Tariff are set out in the table below.

The figures are taken directly from the generation tariffs reported in Ofgem’s FIT Tariff Tables available on the attached links, and are expressed in 15/16 prices.

Please note that we are proposing to revise the subsidy levels for solar PV under both the FIT and the RO, and for wind under the RO. Awarded Contracts for Difference for solar PV and wind will come into place in the next few years.