Energy

Government to end subsidies for onshore wind

Government to end subsidies for onshore wind

Central government has announced that it intends to end public subsidies for new onshore wind generating stations from 1 April 2016, as there now ‘enough subsidised projects in the pipeline to meet [the UK’s] renewable energy commitments’.

Currently, onshore wind farms can apply for subsidies as part of the Department of Energy & Climate Change’s (DECC) Renewables Obligation, which aims to encourage the uptake of renewable energy and help the UK meet European targets that require the UK to produce 15 per cent of its energy from renewable sources by 2020.

According to DECC, over £800 million of government subsidies helped onshore wind to generate five per cent of the UK’s total electricity last year.

Although the subsidies were scheduled to cease for all new energy generators in 2017, Energy and Climate Change Secretary Amber Rudd has said that even though onshore wind is ‘an important part’ of the UK’s energy mix, there are now ‘enough subsidised projects in the pipeline to meet [the UK’s] renewable energy commitments’.

As such, the department will be introducing primary legislation to close the Renewables Obligation for new onshore wind generation stations from 1 April next year.

‘We want to help technologies stand on their own two feet’

Speaking this morning (18 June), Rudd said: “We have a long-term plan to keep the lights on and our homes warm, power the economy with cleaner energy, and keep bills as low as possible for hard-working families.

“As part of our plan, we are committed to cutting our carbon emissions by fostering enterprise, competition, opportunity and growth. We want to help technologies stand on their own two feet, not encourage a reliance on public subsidies.

“So we are driving forward our commitment to end new onshore wind subsidies and give local communities the final say over any new wind farms. 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.”

DECC has said, however, that up to 5.2 gigawatts of onshore wind capacity – for example, projects that already have planning consent, a grid connection offer and acceptance, and evidence of land rights – could be eligible for ‘grace periods’. It added that it will look at options to continue support for community energy projects, as part of the Feed-in Tariff Review later this year.

Despite this, it is estimated that up to 3,000 wind farms that have not yet received planning permission could lose subsidies.

DECC has been increasingly moving away from supporting onshore wind farms, with the new Conservative government announcing measures in the Queen’s Speech 2015 to change the law to give local communities the final say on onshore wind farm applications.

‘Move could cost consumers £3 billion and be subject to judicial review’

The news has been met with dismay from industry and the Scottish Government, with Scotland’s Energy Minister Fergus Ewing saying that the decision will have a “disproportionate impact on Scotland”, as around 70 per cent of onshore wind projects in the UK planning system are based there.

He commented: “This announcement goes further than what had been previously indicated. It is not the scrapping of a ‘new’ subsidy that was promised but a reduction of an existing regime – and one under which companies and communities have already planned investment.

“Onshore wind is already the lowest cost of all low carbon options, as well the vital contribution it makes towards tackling climate change, which means it should be the last one to be scrapped, curtailed or restricted.”

He added that the move places a “huge investment pipeline at risk” and will cause “huge uncertainty for investors not just in onshore but across the renewables sector as a whole”.

Ewing stated that the move will prevent onshore schemes proceeding whilst allowing offshore wind to “go ahead despite receiving far more generous subsidies”, which could lead to “extra costs for consumers of possibly around £2-3 billion”.

He concluded: “Therefore we have warned the UK government that the decision, which appears irrational, may well be the subject of a judicial review.

“The Scottish Government remains ambitious for the renewable energy industry and aims to maximise the vital contribution it makes towards tackling climate change. We will continue to work together with the industry as we continue to support the growth of renewables in Scotland.”

Juliet Davenport OBE, founder and Chief Executive of renewable energy company Good Energy, echoed these sentiments, saying: “We believe the government should be providing solid, stable support for renewable energy which helps tackle the threat of climate change and challenges the dominance of fossil fuels.

“This decision will bring further instability and uncertainty to investors and is transactional government at its worst… Renewable technologies need a stable policy framework from which to grow. They do not need another retrospective policy decision, changing goalposts and associated uncertainty. This will serve only to stifle investment, growth, competition and ultimately, the opportunity to make a meaningful low-cost, low-carbon contribution to the UK’s longer-term energy security.”

Find out more about the DECC decision to remove subsides for new onshore wind generators.

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