Government confirms early end to onshore wind subsidies
The UK Government has confirmed plans to end new subsidies for onshore wind farms a year earlier than previously expected - a move roundly condemned by the renewables industry.
In a statement released today (18 June), Energy Secretary Amber Rudd said the Government wanted to help technologies stand on their own two feet, rather than encouraging them to rely public subsidies.
“We are driving forward our commitment to end new onshore wind subsidies and give local communities the final say over any new windfarms," she said. "Onshore wind is an important part of our energy mix and we now have enough subsidised projects in the pipeline to meet our renewable energy commitments."
The Department of Energy & Climate Change (DECC) confirmed there will be a grace period, where up to 5.2GW of onshore wind projects that already have planning consent, a grid connection offer and acceptance as well as evidence of land rights, could still receive subsidy support.
However, in a Ministerial Statement also released this morning, Amber Rudd seemed to hint that onshore wind could be removed from the Contracts for Difference (CfD) mechanism, which supports large-scale renewable projects.
Fifteen onshore wind projects won contracts in the first CfD auction in February.
Rudd wrote today: “With regard to CfDs, we have the tools available to implement our manifesto commitments on onshore wind and I will set out how I will do so when announcing plans in relation to further CfD allocations."
The Conservative manifesto stated: “We will end any new subsidy for [onshore wind].
Renewable energy experts have been quick to hit out at the decision with many warning that the sudden decision would destroy investor confidence and potentially cost the UK an extra £3bn as it tries to meet decarbonisation targets without the expansion of one of the most cost-effective renewable technologies.
Maria McCaffery, chief executive of lobby group RenewableUK, said: “The Government’s decision to prematurely end financial support for onshore wind sends a chilling signal not just to the renewable energy industry, but to all investors right across the UK’s infrastructure sectors.
“It means this Government is quite prepared to pull the rug from under the feet of investors even when this country desperately needs to clean up the way we generate electricity at the lowest possible cost – which is onshore wind.
“People’s fuel bills will increase directly as a result of this Government’s actions. If Government was really serious about ending subsidy it should be working with industry to help us bring costs down, not slamming the door on the lowest cost option.
“Ministers are out of step with the public, as two-thirds of people in the UK consistently support onshore wind. Meanwhile the Government is bending over backwards to encourage fracking, even though less than a quarter of the public supports it."
McCaffery urged Rudd to open talks with the wind industry so that the impact of these cuts could managed or reduced.
The industry warned earlier in June that Rudd could face legal action if she oversees the "wilful destruction" of the industry by retrospectively curtailing subsidies.
The UK onshore wind industry employs around 19,000 people, which RenewableUK claims could have risen to 37,000 by 2023 if Government policy had remained supportive.
Savills Energy, a developer of renewables infrastructure, urged the Government to rethink its decision in order to avoid irreversible industry damage.
Tim Waterfield of Savills Energy said: “As has been seen across Europe, when subsidies are removed too early, the cost to industry and taxpayers is significant. Without confidence in future political and financial support, investors will lose faith in renewable infrastructure development and all of the good work that has been done to help the UK meet its targets to date will be put at risk.”
Amber Rudd’s Labour counterpart, Caroline Flint, commented: “Renewable energy investment was undermined by the mixed messages of David Cameron’s last government and sadly that looks set to continue.
“Onshore wind is the cheapest and most developed form of clean energy and there are 1,000 projects whose investment plans could be affected by the latest moving of the goalposts. Ministers need to make clear which projects exactly the grace period will apply to.
Govt is on course to miss it's renewables target. Today's knee jerk cut to onshore wind can only undermine confidence across the sector— Caroline Flint (@CarolineFlintMP) June 18, 2015
Some commentators suggested that the subsidy change would not actually affect that many wind farms, thanks to the grace period which could extend to 5.2 GW of projects.
Richard Howard, head of environment and energy at Policy Exchange, said on Twitter that DECC had offered “the most extensive grace period imaginable”, and that “very few” projects would actually be thwarted.
Howard also suggest that the 5.2 GW mark represents more than five years worth of development, given a build rate between 0.5-1.5GW since 2010.
North of the border
That optimism was not shared in Scotland, which produces more of the UK’s renewable energy than the other three counties combined.
Scottish Renewables chief executive Niall Stuart said: “Scottish Renewables completely rejects the UK Government’s rationale for cutting support for onshore wind.
“We believe this decision could put around two gigawatts of onshore wind projects in Scotland at risk. These are projects that could provide the equivalent electricity demand of 1.23 million Scottish homes and significantly improve our energy security, while bringing around £3 billion pounds of investment.
Stuart, who represents more than 300 organisations in Scotland’s renewables industry, continued: “Ending the Renewables Obligation, which projects already in the planning system are reliant upon, is neither fair nor reasonable and would effectively amount to a retrospective act from the Government.
“Onshore wind is the cheapest form of renewable electricity we can deploy at scale, so removing financial support completely undermines the goal of cutting carbon emissions as cost-effectively as possible, and actually risks increasing consumer bills.
Rudd's message to Scotland:
More to follow...