Energy industry hits back at onshore wind RO early shutdown

The UK government has confirmed it will scrap Renewables Obligation (RO) support for onshore wind early, and the energy industry is not happy.

In a move that the sector and green groups fear will “cost the UK dearly”, the Department of Energy and Climate Change (Decc) confirmed this morning that it would scrap subsidies for the technology via the RO from 1 April 2016.

The industry has been unanimous in its dismay at the “baffling” decision which real estate group Savills Energy said could cause an “irreversible impact on investor confidence”.

The group’s director of strategic projects Tim Waterfield stated: “Consultation with key bodies, such as Renewable UK, British Wind and Scottish Renewables, is absolutely key to determine the best outcome for the industry.” 

Scottish Renewables chief executive Niall Stuart believes the decision could put 2GW of onshore wind projects in Scotland, which could have “significantly improved our energy security” and “brought around £3 billion of investment”, at risk. “Early closure of the RO will also serve to damage investor confidence, not only in the onshore wind industry, but in the wider UK energy sector,” he said.

Scottish energy minister Fergus Ewing added that Decc’s decision will “cause huge uncertainty for investors not only onshore but across the renewables sector as a whole” and have a “disproportionate impact on Scotland”.

The fact that the government will cease its support for onshore wind came as no surprise. Prime minister David Cameron has long been vocal about his lack of support for the technology, stating in December that “enough is enough”. “We don’t need any more of these subsidised onshore windfarms so let’s get rid of the subsidy, put them back into the planning system and let them make their case – I suspect they won’t,” he said.

When appointed last month, energy secretary Amber Rudd said she would enforce the Conservative Party’s manifesto pledge to curb the spread of onshore wind through new legislation. She told the Sunday Times: “I’ve already got my team working on it. That’s going to be one of the first things we’re going to do.”

However, Inenco energy expert Matt Osborne argued that cutting support a year early, rather than letting it run to 2017 as originally planned, has “taken the market by surprise”, and could result in a “surge of projects brought forward before subsidies end”.

“We should also expect to see an increased need for alternative sources such as solar and offshore wind to plug the capacity gap,” he added.

Renewable UK said early scrapping of the RO “leaves thousands of British jobs and millions of pounds worth of investment hanging in the balance”.

Here’s how industry reacted to the government’s confirmation of a premature scrapping support for one of the “cheapest and most rapidly deployable sources of clean energy”:

Labour shadow energy secretary Caroline Flint:

“We already know the government is on course to miss a key renewables target, and not only do these knee-jerk changes affect onshore wind, they dampen confidence across the renewable sector.”

Scottish Renewables chief executive Niall Stuart:

“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.”

Good Energy founder and chief executive Juliet Davenport:

“By closing the Renewables Obligation early, the government is letting a vocal minority dictate energy policy. 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.”

Ecotricity founder Dale Vince:

“Putting aside the dishonesty of the announcement, this represents a glaring double standard. Planning regulations stipulate that all energy projects over 50 MW are decided at national level – this applies to coal, oil, gas and nuclear – yet only wind will now to be decided by local councils – the most popular and least harmful of all sources of energy.”

CBI deputy director general Katja Hall:

“Cutting the Renewables Obligation scheme early sends a worrying signal about the stability of the UK’s energy policy framework. This is a blow, not just to the industry, and could damage our reputation as a good place to invest in energy infrastructure.”

Savills Energy director strategic projects Tim Waterfield:

“The government’s decision to terminate onshore wind subsidies is baffling to both industry and consumers… 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.”

EY energy corporate finance leader Ben Warren:

“It is time for the government to clarify its strategy for the UK’s future energy mix. If the objective is to secure clean and affordable energy then the government’s policy needs to accelerate the deployment of onshore wind and solar PV, the two technologies that have proved that they can be the cheapest and most rapidly deployable sources of clean energy.”