Wind farm developers are bracing for cuts to net zero funding as Ed Miliband comes under pressure to reduce energy bills.

Offshore wind companies have been told the Energy Secretary won’t buy power “at any price” amid concern that Labour’s clean power plan risks piling costs on households.

Ministers are expected to announce a budget for the upcoming allocation round seven (AR7) of subsidies as soon as Monday, setting out how much they are prepared to spend on renewable energy projects this year.

The auction will award contracts for difference (CfDs), which guarantee renewable generators fixed revenues and are ultimately paid for by households and businesses.

AR7’s projects would be delivered in 2030 and early 2031, making it one of the last chances Mr Miliband has to secure enough capacity to achieve his goal of shifting the electricity system to renewable power by 2030.

But growing tension within Labour over the potential impact on consumers has raised the prospect that Mr Miliband may be forced to choose between lowering bills and achieving his mission.

The pressure on Mr Miliband ramped up further on Thursday, when Sir Tony Blair’s think tank published a report calling on the Energy Secretary to scrap his clean power mission in favour of one aimed at achieving “cheap power”.

At the same time, it was reported that Sir Keir Starmer was also prepared to miss the Government’s target in order to keep down consumer bills.

Downing Street later insisted the report was “completely wrong” and said the Prime Minister was sticking by the policy.

However, the Government is preparing to take a tougher stance on value for money when it comes to renewable energy.

Sources close to Mr Miliband pointed to a speech he delivered to industry last week, when he said: “We won’t buy at any price. And if specific technologies aren’t competitive, we will look elsewhere.

“We will take the long-term decisions to secure the right amount of capacity at the right price for the country.”

The strike price for offshore wind in last year’s subsidies auction was around £85 per megawatt hour, in 2024 prices, and one wind industry source said there was political pressure for developers to propose lower prices in 2025.

However, the source warned that this looked increasingly difficult as inflation and higher than expected interest rates put upward pressure on project costs.

They added: “Some developers are s- - - ing themselves because they don’t think [lower prices] is doable.”

Another wind industry source dismissed “noise” about the upcoming auction but admitted developers were “conscious that this has to be seen to be good value”.

“People recognise it needs to be cost-effective for the economy,” they said.

Adam Bell, a former government energy official and consultant at Stonehaven, said he believed £80 to £85 per megawatt hour would be seen as reasonably good value. That is around the level that many energy industry insiders believe would keep bills roughly where they are or lower them, assuming that gas prices do not rise.

Some developers may simply bow out of the auction if they couldn’t meet it, Mr Bell said.

Securing good prices is important because the AR7 contracts “lock in” prices for 20 years that influence the electricity market.

Mr Bell added: “If the Government is firm and keeps prices down, that will actually ensure a pathway for clean power because to maintain support, it has to be done on a cost-effective basis.”

Claire Coutinho, the Conservative shadow energy secretary, urged Mr Miliband to “cancel his botched wind auction before he locks us into two decades of sky-high prices”.

She said: “We’ve been warning that his approach of telling multimillion-pound wind developers that he had to buy whatever they were selling would send prices through the roof. This isn’t just what we’ll be paying, it’s what our children will be paying.”

In its election manifesto, Labour promised it would cut household energy bills by £300 a year by 2030.

Last week, energy companies warned that bills were on course to rise by 20pc instead – even if gas prices halved – owing to the mountain of green levies, network charges and system costs that are gradually being piled on to consumers.

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