Miliband takes control of power grid and lays out plan for low-carbon UK

The government seized control of key levers in the energy sector today in an attempt to kickstart a stalling “green energy” revolution and head off the threats of global warming and a rundown in North Sea oil.

Ministers plan to take over the allocation of electricity grid connections in order to favour renewable schemes, force the industry regulator, Ofgem, to tackle carbon pollution and pass laws to compel power companies to help poorer families meet rising energy bills.

The moves came as Ed Miliband, energy and climate change secretary, set out an ambitious road map for the UK to meet its legally binding target of a 34% cut in greenhouse gas emissions by 2020. Measures range across homes, cars, business and farming, but clean electricity generation will deliver half the reduction.

Miliband said Britain would meet 40% of its electricity needs from wind, tidal and nuclear by the end of the next decade. The government’s overall plans believe 1.2m new green jobs will be created.

“Our plan will strengthen our energy security, it seeks to be fair to the most vulnerable, it seizes industrial opportunity and it rises to the moral challenge of climate change,” he said.

The government said £100bn had to be spent on energy projects and accepted that customers’ bills would have to rise to pay for much of it.

But Miliband said domestic energy saving initiatives should mean there would be no related hikes in utility bills until 2015 and by 2020 should mean on average 6% – £75 – a year on domestic bills. The decision to significantly strengthen government control of the planning and infrastructure of the energy markets in a bid to increase renewable power sixfold turns back some of the market-driven approach developed by Margaret Thatcher.

Lord Mandelson, business secretary, said: “We must combine the dynamism of the private sector with a strategic role for government to deliver the benefits of innovation, growth and job creation in the UK.”

The developments have delighted a clean energy sector frustrated by long delays to win access to the national electricity grid. “The renewables industry has had a tough time in the UK for many years and it has missed out on technologies where it should have led the world. What we heard … today shows a level of understanding and political leadership that suggests that may be about to change,” said Gaynor Hartnell, director of policy at the Renewable Energy Association.

Friends of the Earth also welcomed the moves. “Today’s announcements are a significant step towards the creation of a safe, clean and low-carbon future,” said Andy Atkins, executive director.

But some of the large power companies which want to build nuclear and coal plants as well as wind farms still felt the government was not doing enough. “The government has to give companies such as E.ON a market that also gives them confidence to build Britain’s low carbon future,” said Paul Golby, chief executive of E.ON UK, which is pushing to build a coal-fired plant at Kingsnorth but is also engaged in the world’s biggest wind farm, the London Array off the coast of Kent.

Ofgem denied it had been found wanting by the government. “We don’t see this as a kick in the teeth. We have been working under our existing powers to make changes to the grid access regime without much success. So [we] welcome the government stepping in,” said an Ofgem spokesman, who also said it was happy to take on a greener role.

Miliband said he was exercising reserve powers provided under the 2008 Energy Act for the government to intervene. He expects wind and other renewables to provide “over 30%” of the renewable power for electricity by 2020 but denied this was rowing back on a previous commitment to obtain 32%.