Changes to government renewable funding will cut green energy growth warns business
High profile plans aimed at boosting renewable energy investment could back-fire over cuts to established technologies business has warned.
Today (October 20) plans aimed at ‘supporting long-term investment in the UK’s renewables industries’, were laid out by energy secretary Chris Huhne.
The announcement means an increase in funding for the fledgling marine energy market, but the self-proclaimed ‘greenest government ever’ is also planning cuts for more established sectors.
Wave and tidal energy producing projects will, under the proposals, receive five Renewables Obligation Certificates (ROCs) a MWh with no overall cap.
However, banding levels for ROCs for onshore wind generators will be lowered from one ROC a MWh to 0.9.
And, offshore wind funding could be slashed from two ROCs to 1.9 ROCs from April 2015 and then down to 1.8 ROCs in April 2016.
The Energy from Waste (EfW) industry also saw a cut in funding from the government.
Mr Huhne hopes the plans would cost between £0.4bn and £1.3bn less than retaining current bandings.
He said: “We have studied how much subsidy different technologies need, here new technologies desperately need help to reach the market, such as wave and tidal, we’re increasing support.
“But where market costs have come down or will come down, we’re reducing the subsidy.”
By 2017, as a result of these proposals, Mr Huhne hopes to see 70-75 TWh of renewable electricity in the UK.
This would be 70% of the way towards the 108TWh of electricity needed to meet the UK’s 2020 renewable energy target.
However research by RenewableUK shows that the cuts of 0.1 of a ROC for onshore wind could reduce deployment from 12GW to 10.4GW by 2017 – potentially enough power for nearly a 1m homes.
RenewableUK chief executive, Maria McCaffery, said: “Any reduction in financial support will have an impact on the industry, reducing deployment, and potentially jeopardising momentum as we strive to reach our carbon reduction targets.
“However, we recognise the need to drive down costs across the sector, especially offshore.
“Any changes need to be carefully balanced as the proposed onshore reduction would have a disproportionate impact on small community-based wind energy projects, as they don’t enjoy the economies of scale which larger projects can harness.”
Utilyx risk analyst, Andrew Horstead, said: “It’s right that government is lowering subsidies for more mature technologies and raising those for technologies that need greater assistance; we would expect that.
“However, these levels are now to be consulted on, which means further delays and a hiatus in investment until the rules are clarified.
“The government is fast losing its green credibility following its u-turn on solar support through the domestic and large scale feed in tariff scheme and Scottish Power pulling out of the government’s flagship carbon capture and storage project. Through this consultation period the government must ensure it listens and engages with industry.
“If it doesn’t, it can kiss goodbye to its climate change ambitions.”
RSPB head of climate change policy, Harry Huyton, said: “A number of serious and urgent challenges remain.
“In particular, we have yet to see government’s proposals for support for small-scale renewables.
“And DECC have not made a serious attempt to ensure that renewable energy subsidies don’t perversely incentivise a bioenergy industry dependant on massive imports of wood from across the world.”
The consultation on banding for the Renewables Obligation is available on the DECC website and runs until January 12 next year.
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