October 2, 2014 / 1:21 PM / 5 years ago

UPDATE 1-Britain increases renewable subsidy budget to 300 million pounds

(Adds industry figures on impact on new generation, details on solar)

LONDON, Oct 2 (Reuters) - Britain has increased its budget to subsidise electricity projects that use renewable sources by 95 million pounds to 300 million pounds ($486 million), the Department of Energy and Climate Change (DECC) said on Thursday.

Britain plans to reduce its greenhouse gas emissions by at least 80 percent from a 1990 baseline by 2050, and is handing out subsidies as an incentive to power generators to shift from fossil fuels to low carbon power generation technologies.

“We are transforming the UK’s energy sector, dealing with a legacy of underinvestment to build a new generation of clean, secure power supplies that reduce our reliance on volatile foreign markets,” said Energy and Climate Change Secretary Ed Davey.

The low-carbon electricity projects will compete at an Oct. 16-30 auction for the subsidies.

“Established technologies, such as onshore wind and solar, will compete for up to 65 million pounds in support, reflecting the fact that these technologies are already more competitive,” DECC said in a statement.

“Less established technologies, such as offshore wind and marine, will share in up to 235 million pounds, ...helping these technologies become as competitive as the more established low carbon generation sources.”

The projects that win the auction will receive 15-year contracts, DECC said.

Lobby group RenewableUK said the extra money was likely to add around 200 megawatts to the generation capacity built as a result of the scheme to yield 700-800 MW, enough to power 350,000-400,000 homes.

The government on Thursday also confirmed it will end subsidies under its previous scheme for new solar power plants from April 1, 2015, two years earlier than expected because of soaring costs.

DECC said there would be a grace period for projects that had made significant financial commitments by May 13, when the consultation on the change began.

Budgets for next year’s auction will be confirmed in 2015, DECC said. (Reporting by Henning Gloystein and Susanna Twidale, editing by Mark Heinrich)

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