AR7 refers to the UK’s Allocation Round 7 of the Contracts for Difference (CfD) scheme, a government auction process for subsidizing renewable energy projects, primarily offshore wind. It is a key part of Energy Secretary Ed Miliband’s push for “clean power by 2030” under the Labour government.

Ed Miliband’s “poison pill” debate reflects broader UK tensions over net zero costs, subsidies, and energy bills.

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From The Global Warming Policy Foundation

By David Turver

London, 4th February. AR7 is Ed Miliband’s “poison pill”, entrenching higher costs, weaker energy security and reduced democratic scrutiny for a generation, according to a new briefing paper from The Global Warming Policy Foundation.

• New analysis warns AR7 will lock households into decades of higher electricity bills. The subsidies will add the equivalent of £79 per household annually to economy-wide electricity costs and the contracts are guaranteed for 20 years.
• These costs come as the grid is being expanded and reinforced to manage increasing intermittent power capacity. By 2031, household can expect to be paying £400 annually in balancing and backup costs, and £134 from grid expansion.
• Government claims that renewables are “cheap” rely on unrealistic assumptions, ignoring the soaring costs of intermittency, backup generation and curtailment.
• Official forecasts once again underestimate the true cost of net zero electricity, with AR7 contracts priced above gas-fired power even before system costs are included.
• Analysis shows firm power capacity is forecast to decline, raising blackout risks.

In The Risks of AR7 – Ed Miliband’s Net Zero Poison Pill, energy analyst David Turver analyses official AR7 auction data and cost forecasts from the Department for Energy Security and Net Zero (DESNZ), the Office for Budget Responsibility (OBR), the National Energy System Operator (NESO) and Ofgem. He concludes that government Net Zero costings understate the true price of renewable electricity by excluding the full costs of subsidies, intermittency, backup generation and grid expansion.

International Energy Agency (IEA) figures suggest that the UK had the highest non-domestic electricity prices in the developed world, with the second or third highest domestic prices, depending on measurements.

AR7 and AR7a are expected to add an additional £2.3 billion to energy bills, with grid balancing and maintenance costs adding billions of pounds more.

The report concludes that AR7 and the wider Clean Power 2030 programme will lock Britain into higher electricity costs and greater supply risks for decades.

David Turver, author of the paper, said:

“AR7 and Miliband’s broader Clean Power 2030 plan are a poison pill that will leave us with high energy prices and unreliable power for decades to come. Miliband must be stopped before he does even more damage.”

Lord Mackinlay, Director of the Global Warming Policy Foundation said:

“It is clear that the AR7 round has produced only one group of winners – the subsidy-hungry wind power companies who have literally ‘tucked-up’ the British taxpayer. They knew that Ed Miliband and his Department needed to secure this auction round at virtually any price. This will mean even higher energy prices, estimated at £79 per household, indexing up annually across the 20-year term of this incoherent endeavour.

If this wasn’t bad enough, as reliance on intermittent renewables increases, their true costs—unnecessary grid expansion, balancing, and backup—will rapidly come into view, adding a further £500 plus per household each year.

AR7 marks another dark chapter for energy security and affordability.”

Harry Wilkinson, Head of Policy at the Global Warming Policy Foundation said:

“At a time when Britain labours under some of the highest electricity prices in the world, Miliband has chosen to entrench a failing system. This is reckless in the extreme and the implications will be very challenging to reverse.” 

The Risks of AR7 – Ed Miliband’s Net Zero Poison Pill can be read here.