Subsidies for onshore wind farms in the UK are to be cut by 10 per cent.

The reduction is in line with that advocated by Energy Secretary Ed Davey and significantly less than the 25 per cent believed to have been favoured by the Treasury and Chancellor George Osborne.

Davey said the decision would create stability in the UK renewables sector and allow it to “create a multi-billion pound boom for the British economy”.

He said new investment coming into Britain’s energy market could be between £20-£25bn.

“The support we’re setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and shows the key role of renewables for our energy security,” he added.

Today’s announcement ends weeks of speculation over the subsidy cut. Davey and the Department of Energy and Climate Change (DECC) said the onshore wind sector could withstand a cut of up to 10 per cent but no more, while Osborne was believed to be pushing for the deeper 25 per cent reduction.

If today’s decision is a victory for Davey, it has come at a price: Osborne is said to have only agreed to the 10 per cent cut if natural gas was front and centre in DECC’s future energy plans.

And this morning’s statement from DECC outlining the wind reduction then went on to state:  “Alongside its plans for renewables, the government is also committed to ensuring that the UK is an attractive location for gas investors.”

It added that the government “sees gas continuing to play an important part in the energy mix well into and beyond 2030, while meeting our carbon budgets.”

“Through the 2020s, and beyond if gas proves cheap, we expect it to continue to play a key role ensuring that we have sufficient capacity both to meet everyday demand and complementing an increasing amount of relatively intermittent and inflexible generation.”

DECC also announced today that government support for certain marine energy technologies will more than double, subject to a 30 MW limit per generating station, and there will also be new support for existing coal plants that convert to biomass fuels.

The Confederation of British Industry welcomed today’s announcement. Its director-general John Cridland said: “The level of support the government has agreed for onshore wind will help to encourage investment into our energy sector, creating jobs and supporting growth. Companies must be able to invest with confidence so that we can have secure, affordable and low-carbon electricity in the decades to come.”

He also backed the emphasis on gas. “The government is right that gas should play a crucial role in any future energy mix. We have argued that there is no need for a false choice between renewables, nuclear, gas, and carbon capture and storage. It’s clear from the evidence that we need a diverse supply.”