The Contracts for Difference subsidy is set to be introduced after the Energy Bill received Royal Assent.
But the Government has also announced that in line with new EU guidelines on competition, it is considering introducing competition for more established low carbon technologies when the Contracts for Difference regime is introduced. It will decide on this in early 2014.
Energy Secretary Ed Davey said: “We have driven the Energy Bill through Parliament on time to send out a clear signal to investors and industry. We have delivered the certainty they need and confirmed Britain’s position as one of the most attractive countries in the world to invest in energy generation.
“We are now able to build on the measures already in place to deliver cleaner energy, affordable bills, energy security and the creation of thousands of skilled green jobs across the UK.”
Under the proposed EU rules on state aid, it is being suggested that with increasing penetration and decreasing costs, state aid should gradually move to a more market friendly support of renewable energy in the form of market premiums or certificate schemes.
On the European Commission’s proposed state aid reforms for renewable policies, REA chief executive Nina Skorupska said: “Much like the UK Government’s reforms, we welcome steps to reduce policy costs and boost competition. But the Commission must be very careful in its handling of these reforms to avoid undermining investor confidence.”