Government axes early subsidy certainty for renewables

The UK renewables sector has been dealt a further blow by the Conservative government following its decision to scrap measures designed to give subsidy certainty for renewables projects in the early stages of development.

The government said on Wednesday that it would axe pre-accreditation for projects applying for support through the Feed-in Tariff (FiT) scheme, effectively blocking developers from securing an agreed subsidy rate before costly permitting applications and construction begins.

The government’s move aims to protect energy bill payers against spiraling costs of supporting low carbon development. But for the renewables industry the move may further erode investor certainty after a raft of changes to the government’s policy on renewable energy support.

As part of the public consultation held over the summer the lobby group Renewable UK warned government that for medium sized wind developers, it will be “very difficult” to secure finance without any guarantee that the early investment costs will achieve a return once the project is complete.

“This change will militate very strongly against project finance,” the group said.

“Looking at this from an international perspective, the government’s actions send a clear message to international investors and the supply chains that the UK is unreliable and unwelcoming. Government needs to consider the larger scale impact on trade and investment,” the group added.

The Solar Trade Association (STA) accused the government of ignoring the “overwhelming opposition” of the industry to the consultation.

“Just 16 out of 2372 respondents supported the proposal to do away with pre-accreditation, and yet the Government has gone ahead and done it anyway,” said STA head of external affairs Leonie Greene.

The latest blow for renewables groups comes just two weeks after the government announced a separate consultation which could see support rates through the FiT removed altogether.

Decc is consulting on whether to close the FiT to new applicants by January 2016 if cost control measures are not implemented or prove to be ineffective.

These cost control measures include introducing new tariffs based on “fresh evidence” about the costs and rates of returns on solar, wind and hydropower technologies. This could see support for solar scaled back by up to 86 per cent, and some subsidies for onshore wind removed completely.

The Solar Trade Association’s head of policy Mike Landy branded the move “the antithesis of a sensible policy” for achieving better public value for money.

Energy secretary Amber Rudd said that the falling costs of renewables means that it will be easier for parts of the renewables industry to “survive” without subsidies.

“Which is why we’re taking action to protect consumers, whilst also protecting existing investment,” she said.

Renewable UK has urged the government to reinstate pre-accreditation once the ongoing consultation has concluded, saying this is a “vital measure” to ensure that a sufficient number projects go ahead.

The removal of pre-accreditation will only apply to new participants in the FiT scheme from 1 October.