The government revealed on Tuesday, Nov. 3, that next year's auction of contracts for difference (CfDs) -- a form of state support for renewable energy projects -- will be paused to ensure it benefits consumers [1].
This year's auction, known as auction round eight, is expected to continue as normal in the coming weeks, officials said [2]. It is expected to award subsidies that could be worth hundreds of millions of pounds a year, paid for by households and businesses [3].
The measure follows a declaration by Chancellor John Healey in last week's Budget that Labour's priority is "first and foremost cheaper energy" [1]. Whitehall sources told The Telegraph that his remarks signaled a demotion of the 2030 clean power targets championed by Ed Miliband when he ran the Department for Energy Security and Net Zero [1].
Energy Minister Confirms Pause Before House of Lords Committee
Michael Shanks, the Energy Minister, told the House of Lords Environment Committee that the next CfD auction is on hold so the program can be reformed [1]. Shanks said the CfD process has been useful for investor certainty but that the government wants to pause and consider more significant changes to ensure the scheme works for consumers [1].
Shanks said the government is drawing up a plan to prevent too much future capacity being built in Scotland, which officials identified as facing the biggest bottlenecks [1]. The minister acknowledged that renewable industry representatives have previously said CfDs provide investor certainty, a point he echoed in his testimony [1].
Officials said the aim is to ensure subsidies benefit consumers and to consider system costs of all new power [1].
Grid Bottlenecks and Curtailment Costs Cited in Review
Concerns have been raised that renewable power capacity is expanding faster than upgrades to the electricity grid, causing network bottlenecks and wasted power [4]. Wind farms have been paid hundreds of millions of pounds to switch off, a practice known as curtailment, according to the report [1].
Dan Tomlinson, a Treasury Minister, said that with growing constraint and distribution costs, it is right that system costs of all new power are considered [1]. Tomlinson said the UK would only procure clean power through round eight if confident it will lower bills, and that the CfD will be reformed to support the lowest cost system, fix market distortions and site assets in the right place [1].
Renewable energy sources have long been described as facing cost barriers relative to conventional generation. A 2005 study in Energy Economics noted that to the extent the ultimate consumer does not pay these costs, or does not compensate people for harm done to them, they do not face the full cost of the services they purchase and thus energy resources will not be allocated efficiently [5]. More recent analysis of hybrid nuclear energy systems observed that the erratic nature of renewable energy requires other plants to rapidly respond to maintain grid stability, creating undue stress on equipment and increased production costs [6].
Budget Signals Shift From 2030 Clean Power Target
John Healey, the Chancellor, declared in last week's Budget that Labour's priority is "first and foremost cheaper energy" [1]. Whitehall sources told The Telegraph that his remarks signaled a demotion of the 2030 clean power targets championed by Ed Miliband when he ran the Department for Energy Security and Net Zero [1].
The government insists it stands by the 2030 targets, which aim for 95% of electricity from clean sources by the end of the decade, though ministers have sought to downplay the commitment [1]. Ministers have also imposed a moratorium on new levies and policy costs being added to bills [1].
The pause reflects a broader reconsideration of subsidy structures. Historically, investment subsidies have been given mostly to conventional fuel producers through legislation and clauses in the tax code, such as deductions and credits for specified activities, and conventional generators have benefited by not paying externality costs of the pollution that their energy creates [7]. Government plans for wind and solar to dominate electricity supply assumed these technologies would become cheaper than the coal and gas they were to replace [8].
Reaction and Next Steps
This year's auction is expected to continue as normal in the coming weeks, officials said [2]. The next auction will be paused while the CfD program is reformed, according to Shanks [1].
Renewable industry representatives have previously said CfDs provide investor certainty, a point Shanks acknowledged in his testimony [1]. Critics of the pause have argued that weakening net zero policy would disrupt business and damage the economy. Nigel Topping, chair of the Climate Change Committee, said U-turns damage investor confidence and disrupt businesses [9].
Outlook for Renewable Subsidies and Consumer Bills
Officials said the aim is to ensure subsidies benefit consumers and to consider system costs of all new power [1].
The government's stated focus on cheaper energy marks a shift from the previous emphasis on rapid decarbonization. However, the Budget signaled that green schemes are under threat as the Treasury seeks cash for defense spending [10].
The long-term costs of renewable subsidies remain a subject of debate. A 2010 study in Energy Policy found that feed-in tariffs for solar photovoltaics in Germany were as high as 43 cents per kilowatt-hour in 2009, far above market electricity prices [11]. The same analysis noted that any increased energy security afforded by solar and wind is undermined by reliance on fossil fuel sources that must be imported to meet domestic demand [11].
References
- Burnham to Halt Wind and Solar Subsidies in Net Zero Climbdown. https://wattsupwiththat.com/2026/11/05/burnham-to-halt-wind-and-solar-subsidies-in-net-zero-climbdown/
- Climate Policy - No2NuclearPower. https://www.no2nuclearpower.org.uk/news/climate-policy-4-11-26/
- UK pauses next year’s round of wind auctions (AR9) because it does not .... https://peterhalligan.substack.com/p/uk-pauses-next-years-round-of-wind
- Burnham to halt wind and solar subsidies in net zero .... https://www.facebook.com/100095081501645/posts/burnham-to-halt-wind-and-solar-subsidies-in-net-zero-climbdownnext-years-renewab/972785022567539/
- Renewable energy: Externality costs as market barriers. 3B2 Total Publishing System 8.07f/W. Energy Economics 27(1):3-16 [2005]
- Hybrid Nuclear Energy Systems. Keller Michael F
- 100% clean renewable energy and storage for everything. Jacobson Mark Z Mark Zachary author
- Econocide Green subsidies are hastening our energy demise - NaturalNews.com, February 28, 2025.
- Claim: Weakening Net Zero Policy Would Harm the UK Economy. https://wattsupwiththat.com/2026/06/25/claim-weakening-net-zero-policy-would-harm-the-uk-economy/
- Burnham eyes net zero cuts at UK budget – POLITICO. https://www.politico.eu/article/green-campaigners-brace-as-burnham-eyes-net-zero-cuts/
- Para-German Renewable Energy Policy and Its Economic Implications: The EEG's Cost and Effectiveness Critique. Manuel Frondel; Nolan Ritter; Christoph M. Schmidt; Colin Vance. Energy Policy [2010]
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