UK renewable energy industry warns of legal action over subsidies

The UK renewable energy industry has warned the government's new climate secretary that she will face a legal challenge if she oversees the "wilful destruction" of the industry by retrospectively curtailing subsidies.

Later this week, the Department of Energy and Climate Change will announce that the existing subsidy scheme for onshore wind power will be closed a year earlier than it was due to, according to a source close to the process.

Such a move would be a major blow to the industry and go further than the Conservative party had pledged in its manifesto. It had said that it would “end any new public subsidy” in a bid to “halt the spread of onshore windfarms”.

But writing in the Guardian on Monday, a lawyer for the trade body RenewableUK called on Amber Rudd to reconsider – or face legal challenges.

“Minister, please talk to us before you act. We recognise the pressures on you. There are solutions which need not damage confidence in the UK or in your government as one for all of us and not just for a few dangerous, ill-informed and visibly rabid party members,” wrote Marcus Trinick QC, a barrister for law firm Partner Eversheds LLP.

“Please be aware of the dangers of [EU] state aid discrimination and look at what is happening in international energy arbitration across Europe. In such a position we could not afford not to fight, especially if action is taken to interfere retrospectively,” he added.

If the Renewable Obligation (RO) subsidy scheme closes in April 2016 rather than April 2017, as is now expected, onshore windfarms will have to bid for public subsidy under a new subsidy regime known as Contracts for Difference (CfD).

But it is not yet clear if they will even be eligible for the CfD scheme, and Bloomberg Energy Finance has estimated that if onshore wind was not eligible then less than half the capacity of projects in advanced stages of planning would get subsidies.

Maf Smith, deputy chief executive of RenewableUK, vowed to fight the move which he said would appear to contradict the Tory pledge that cuts would only be to new, not existing, subsidies.

“The industry will fight against any attempts to bring in drastic and unfair changes utilising the full range of options open, including legal means if appropriate,” he said.

Ian Marchant, chairman of Infinis Energy Plc and former chief executive of Big Six energy company SSE, warned that closing the subsidy scheme early for onshore wind would have wider ramifications: “If the RO is terminated early without reasonable grace periods in place, not a single energy or large scale infrastructure project in the UK will be safe going forward.”

Dr Rob Gross, an energy expert at Imperial College, said that it was not fair to suggest the RO was hugely over-rewarding onshore wind with too much public subsidy. 

“I think this is mainly about the manifesto commitment and being seen to do something to curtail the development of onshore wind. It’s primarily a politically-motivated change,” he told the Guardian.

Rudd said in statement that: “We promised people clean, affordable and secure energy supplies and that’s what I’m going to deliver. We’ll focus support on renewables when they’re starting up – getting a good deal for billpayers is the top priority.” A Decc spokeswoman added: “It’s premature to talk about retrospective changes [to subsidy regimes].”

The government has already laid out the other part of its crackdown on onshore windfarms, using the Queen’s speech to announce that the energy bill will give local communities an effective veto over new ones. Onshore wind is considered by most authorities to be the cheapest form of renewable power in the UK.

Adam Vaughan

This article first appeared on the guardian

Edie is part of the guardian environment network

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