UK to retroactively cut onshore wind subsidy

The Renewable Obligation will end a year earlier than planned, on 1 April 2016, but a grace period could still allow up to 5.2GW of projects to proceed.

The UK is joining Spain, Italy and other European countries in implementing retroactive cuts to renewables subsidies. The government announced today it will end the Renewable Obligation (RO) subsidy for onshore wind a year earlier than expected.

As early as last October, the Department of Energy and Climate Change (DECC) had stated that large-scale wind farms built before the end of March 2017 automatically qualified for the outgoing RO regime. Post-2017, they will have to make do with the unloved Contracts for Difference framework. But today the DECC backtracked on that pledge, stating instead that it will end the subsidy one year earlier.

“We want to help technologies stand on their own two feet, not encourage a reliance on public subsidies,” said Energy and Climate Change Secretary Amber Rudd. “So we are driving forward our commitment to end new onshore wind subsidies and give local communities the final say over any new windfarms. 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 government said it is putting in place a grace period for projects that have already gained planning consent, a grid connection offer and acceptance, as well as evidence of land rights. It says this grace period could allow up to 5.2GW of onshore wind to still qualify for the RO. It added that it spent £800 million ($1.3 billion; €1.1 billion) in onshore wind subsidies last year, which generated 5 percent of the UK’s total electricity.

“The government justifies cutting support for onshore wind on the basis of saving money and wanting technologies to stand on their own feet. At the same time, it awards a further 35 years of new subsidies to nuclear, and billions to the oil and gas industry. The IMF recently reported that Britain spends £30 billion a year subsidising the fossil fuel industry, that’s over £1,000 per household. Onshore wind by contrast costs £10 per household,” said Ecotricity founder Dale Vince.

Maria McCaffery, chief executive of trade body 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 across the UK’s infrastructure sectors”.

The Conservatives had pledged to cut subsidies for onshore wind farms in their pre-election manifesto, stating onshore wind lacks public support. They have also initiated a change of law which will give local communities the power to approve wind farms equal to or greater than 50MW.

“This represents a glaring double standard,” railed Ecotricity’s Vince. “Planning regulations stipulate that all energy projects over 50MW are decided at national level – this applies to coal, oil, gas and nuclear – yet only wind will now be decided by local councils. If the Tories are serious about this […] then they should apply it evenly across the board – give local people a say on all energy sources.”

RenewableUK pointed out that the onshore wind industry generated £906 million in gross value added revenue to the UK economy last year. According to a February survey by the DECC, 68 percent of UK adults actually support onshore wind – a level of support which has remained consistently stable for at least a year.

This article was first published on Low Carbon Energy Investor.