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Investment in the offshore wind sector faces a “cliff edge” in 2020 due to government policy failing to provide long term certainty and clarity, MPs have warned.
Speaking in a Westminster Hall debate on Tuesday morning, politicians said that due to a lack of long term support offshore wind developers are being deterred from investing in the UK.
Shadow energy minister Julie Elliott said the government is giving out “mixed messages on energy policy and continuing uncertainty” by failing to provide a CfD budget for beyond 2018.
She accused the government of “acts of hostility” against renewable energy – by cutting subsidies to solar and attacks on onshore wind – and called for a cross party consensus to be re-established.
Conservative Peter Aldous partially supported Elliott and said that more long term certainty was needed for the sector, which currently faces a “cliff edge” in certainty by 2020.
He added the £235 million allocated to less mature technologies – including offshore wind – in the CfD auctions was “lower than expected” and “sent the wrong signals” to developers and dissuaded them to from investing.
The SNP’s Eilidh Whiteford said the CfD allocation, which offers £155 million for 2016/17 and £80 million for 2017/18, has left developers “scrabbling around for the crumbs” and would prevent investors from coming to the UK because there is not a “real chance” of them securing a CfD.
Mike Weir, also of the SNP, added that “giving some indication of the projected budgets and the intended direction of travel” would help address industry concerns and start to provide some longer term clarity.
Ben Wallace, assistant whip at the Treasury, defended the government, saying that while it does support offshore wind a “balance” between providing subsidy and protecting the consumers has to be struck.
He said: “Support for projects have to fit into the overall levy control framework cap. We can’t worry on standard of living while giving blank cheques to projects through levies on bills.”
Wallace told MPs the split CfD allocation was chosen to provide developers with a second opportunity to secure a contract and to “avoid a boom and bust investment cycle”.
He added that a “considerable amount of money – up to £1 billion” was still available to developers in the form of CfDs.
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