Support for Scottish windfarms will increase energy bills
In the latest round of the Contracts for Difference programme floating windfarm developers will be guaranteed £271 per megawatt hour (MWh) for their output regardless of what prices prevail in the market.
The value of the revenue guarantee has increased by more than 10% since the latest allocation round was completed last year, when the strike price for floating windfarm output was set at £245/MWh.
Mr Miliband is so anxious to ensure that the round is a success that he has also agreed to extend the standard term of CFD awards to 20 years from 15.
READ MORE: Just transition fund farce deepens as Scottish firms fight over windfarm scraps
The changes were announced weeks after Scottish Renewables said bold action was required from ministers to maintain the momentum behind the development of the emerging floating windfarm sector, which champions reckon can play a crucial role in the net zero drive.
While only two floating windfarms have been developed off Scotland to date their performance has reinforced hopes that such schemes could offer big advantages compared with conventional facilities that have foundations on the seabed.
Floating windfarms can be deployed in deeper waters allowing them to harness stronger winds that blow more consistently than those nearer to the shore.
They could be placed far enough offshore to ease the concern of critics such as Mr Trump who complain about the impact of windfarms on views.
Scotland is seen as being well placed to capitalise on the development of floating windfarms because of its geography and its oil and gas industry heritage.
Around 90% of the waters off Scotland are deep. Dan Jackson, who is leading work on Cerulean Winds' plans for the Aspen floating windfarm off Aberdeenshire, has noted that wind strengths in the area it is targeting are more than double what they are in southern England.
READ MORE: Investors eye Scottish floating windfarm bonanza
The hope is that success in the floating market will help compensate for the disappointments that Scotland has suffered to date in terms of the economic impact of renewables activity. While firms have invested heavily in conventional developments on land and offshore, with CFD support, the benefits have gone mainly to companies based outside Scotland.
The number of jobs created in Scotland has fallen well short of expectations. A report on the SNP Government's £500m Just Transition Fund released this month found that it helped create just 110 jobs in its first two years.
Excitement about the potential value of floating wind activity in Scotland increased after US private equity investors agreed two years ago to provide £300m backing for a plan to turn the Port of Ardersier on the Cromarty Firth into a major low carbon energy support facility.
But some people will be concerned that Scotland will benefit disproportionately from the support that will be provided for floating windfarm developments.
Lots of firms have shown interest in Scotland. Crown Estate Scotland awarded leases covering acreage on which firms expect to deploy around 25 windfarms in rounds completed in the last three years.
Successful applicants included Cerulean, Shell, SSE and ScottishPower.
However, firms appear less enthusiastic about the waters off England.
In June a licensing round covering acreage off South West England generated a disappointing response.
READ MORE: SNP Government green jobs failure seen in English city's success
The concern about Scotland's share of floating windfarm funding support will be heightened by the fact that the costs of the technology are much higher than those for established alternatives.
In the allocation round that it is expected will be launched next month conventional offshore windfarms will be guaranteed £113/MWh for their output compared with £102/MWh last time. Onshore windfarms will be guaranteed £92/MWh against £89/MWh.
Developers will get top up payments if market rates fall below the strike prices guaranteed under the CFD round. If rates rise above the strike price developers will have to pay over the difference.
However, Governments have run the CFD scheme for years in the expectation that the amounts paid to developers will far exceed recoveries.
Mr Miliband boasted that the budget for the allocation round that was completed last year would be increased by £500m to £1.5bn.
The latest data collected by the regulator Ofgem indicates that wholesale prices averaged around £80/MWh in May.
If rates remain around that level floating windfarm developers will be in line for big payments under the CFD contracts awarded in the forthcoming round.
The costs will be added to the energy bills of householders across the UK irrespective of whether projects in the areas they live in will benefit.
READ MORE: As Chevron closes Aberdeen office, what now for North Sea jobs?
The proposals for the latest CFD round underline the fall in the price of solar energy schemes, which are more widespread south of the border.
The strike price for solar will fall to £75/Mwh from £85/MWh.
Scotland could also benefit from the increase in the strike price for larger hydropower schemes, to £168/MWh from £142/MWh.
However, Scottish energy giant SSE has provided a reminder that the performance of hydropower and other renewable schemes depends on the weather.
This month the energy giant revealed that its hydropower output slumped 40% in the latest quarter amid the sunshine the UK enjoyed.
In a trading update issued at SSE's annual general meeting the Perth-based firm welcomed the increase in the length of new CFD contracts.
The company also praised the Government's decision to retain a UK-wide electricity pricing system although critics claim this prevents householders in Scotland from benefiting from the abundance of renewable electricity in the country. SSE warned a shift to a system under which prices varied in different parts of the UK would lead to cuts in investment.
As chief executive Alistair Phillips Davies retired after 12 years in post, the company made clear at the AGM that it remained keen to invest in renewables generation assets and the network improvements that will be required to make the most of them.
However, SSE expects gas-fired power to remain a key part of the energy mix for years.
READ MORE: Israeli-owned firm takes control of UK's biggest gas field
It continues to cause the SNP Government discomfort by championing plans for a new gas-powered plant at Peterhead with related carbon capture facilities.
First minister John Swinney would love to see Scotland secure the jobs the plant would create but is under intense pressure to oppose the development from the greens the [[SNP]] wants to keep onside.
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