Norwegian companies Statoil and Statkraft to receive £1.6 billion subsidies for setting up UK wind farm

Two Norwegian state-controlled energy companies are set to receive £1.6 billion by way of subsidies from UK consumers, following their decision to invest £1.5 billion in building a wind farm off the coast of Norfolk, The Telegraph newspaper reports.

According to Statoil and Statkraft, they would start work on the Dudgeon offshore wind farm after receiving a contract from the UK government, guaranteeing they would be paid roughly triple the current wholesale power price for every unit of electricity generated by the project.

The 67-turbine wind farm, the first to proceed under the government's new system of green subsidy contracts, pending state aid approval from the EC, could come on stream in 2017 generating enough power to supply 410,000 homes.

According to Statoil, the project would create at least 70 direct permanent jobs and during peak construction phase, there would be 350 further temporary jobs.

The manner in which ministers awarded subsidies to Dudgeon and seven other projects came under sharp criticism from The National Audit Office last week. The projects received contracts early with no competition. According to the NAO, this could result in ''excessive'' returns for energy companies even as consumers received poor value for money.

Meanwhile, the two Norwegian companies have decided to start constructing the Dudgeon wind farm off the coast of Norfolk.

The 402MW wind farm would likely support 450 jobs and generate enough electricity to power over 400,000 homes. The wind farm is expected to get investments of £1.5 billion.

According to energy minister, Michael Fallon, Tuesday's decision underlined the success the government's new contracts and would bring about a steady stream of investment in renewable electricity, Energy Live News reported.

As the best place in the world to invest in offshore wind, he said, the UK was attracting millions of pounds of investment, supporting hundreds of local green jobs and strengthening its energy supply with home-grown sources.