Rudd justifies cutting £800m wind farm subsidies as fair to consumers and taxpayers (before meeting with Scottish Energy Minister)

Amber Rudd, UK Minister for Energy
Amber Rudd, UK Minister for Energy
Fergus Ewing, MSP, Scottish Energy Minister3
Fergus Ewing, MSP, Scottish Energy Minister

British Energy Minister Amber Rudd today told MPs that the government’s decision to end £800 million of subsidies to onshore wind factories is fair to both consumers and taxpayers.

Meanwhile, she is due to have the first face-to-face meeting with Fergus Ewing, her Scottish counterpart on Wednesday.

Rudd said: “This Government is committed to meeting objectives on cutting carbon emissions and to continue to make progress towards the UK’s 2020 renewable energy targets.

“The renewable electricity programme aims to deliver at least 30% of the UK’s electricity demand from renewables by 2020.

We are on course to achieve this objective. Renewables already make up almost 20% of our electricity generation and there is a strong pipeline to deliver the rest.

“As we de-carbonise it is imperative that we manage the costs to consumers. Although renewable energy costs have been coming down, subsidies still form part of people’s energy bills and as the share of renewables in the mix grows, the impact gets proportionally larger.

“It is one of this Government’s priorities to bring about the transition to low carbon generation as cost effectively and securely as possible.

“The Levy Control Framework, covering the period up to 2020/21 is one of the tools to help achieve this. It limits the impact of support for low carbon electricity on consumer bills.

“We have a responsibility to efficiently manage support schemes within the Levy Control Framework to ensure that we maintain public support for the action we are taking to bring down carbon emissions and combat climate change.

“Government support is designed to help technologies stand on their own two feet, not to encourage a permanent reliance on subsidy. We must continue to take tough judgements about what new projects get subsidies.”

The Minister said that onshore wind has deployed successfully to-date and is an important part of the UK energy mix.

In 2014, onshore wind made up around 5% of electricity generation, supported by around £800m of subsidies. At the end of April 2015, there were 490 operational onshore wind farms in the UK, comprising 4751 turbines in total.

These wind farms have an installed capacity of 8.3GW enough to power the equivalent of over 4.5 million homes.

The Electricity Market Reform Delivery Plan projects that the UK requires between 11-13 GW of electricity to be provided by onshore wind by 2020 to meet renewable electricity generation objective while remaining within the limits of what is affordable.

Rudd added: “But we now have enough onshore wind in the pipeline, including projects that have planning permission, to meet this requirement comfortably. Without action we are very likely to deploy beyond this range.

“We could end up with more onshore wind projects than we can afford – which would lead to either higher bills for consumers, or other renewable technologies, such as offshore wind, losing out on support.

“We need to continue investing in less mature technologies so that they realise their promise, just as onshore wind has done.

“It is therefore appropriate to curtail further subsidised deployment of onshore wind, balancing the interests of onshore developers with those of bill payers.

“This Government was elected with a commitment to end new subsidies for onshore wind and also to change the law so that local people have the final say on onshore wind applications. We are now acting on that commitment.

“I have proposed a grace period which would continue to give access to support under the RO to those projects which, as of 18th June 2015, already have planning consent, a grid connection offer and acceptance and evidence of land rights for the site on which their projects will be built.

“We estimate that around 7.1 GW of onshore wind capacity proposed across the UK will not be eligible for the grace period and are therefore unlikely to go ahead as a result of announcement of the 18 June.

“That equates to around 250 projects totalling around 2500 turbines now unlikely to be built.

Therefore, by closing the RO to onshore wind early, we are ensuring that we meet our renewable electricity objectives, while managing the impact on consumer bills and ensuring that other renewables technologies continue to develop and reduce their costs.

“Consumer bills will not rise because of this change. Indeed, those onshore wind projects unlikely now to go ahead would have cost hundreds of millions of pounds.

I believe this draws the line in the right place.”

But – in an astute political move – Rudd will seek formal (Westminster) parliamentary approval on the floor of the House of Commons (where the Govt has a majority) so as to claim a valid electoral and parliamentary mandate for cutting farm subsidies. She added:

“I am particularly conscious of the fact that 68% of the onshore wind pipeline relates to projects in Scotland.

“So I will continue to consult with colleagues in the Scottish Government, indeed I am meeting the Scottish Energy Minister, Fergus Ewing, on Wednesday.

“And by implementing these changes through primary legislation, they will be subject to full parliamentary scrutiny including from MPs  representing Scottish constituencies” <where 56 out of 59 seats are held by Ewing’s party following the SNP tsunami in the general election>.

In reply, Scottish Energy Minister Fergus Ewing said: “We don’t believe an early closure of the Renewable Obligation is a sensible decision and will expose the UK Government and hence the taxpayer to the risk of Judicial Review. However if such a decision goes ahead it must be ameliorated by a grace period covering all projects currently in planning.”

Hector Grant, Chief Executive, Scottish Energy Association
Hector Grant

Hector Grant, Chief Executive, Scottish Energy Association commented: “It is good to see that the Secretary of State for Energy and Climate Change will continue to consult with her colleagues in the Scottish Government regarding the Renewable Obligation.

“We would however continue to suggest that onshore wind has a key and continuing role to play in meeting energy policy objectives as set out in the manifesto and we believe the Government should reconsider how it implements this withdrawal.”

See also

Wind farm industry thrown into disarray as UK Govt decision to axe onshore subsidies ‘will cause 000s of projects to be abandoned’ http://goo.gl/1vu32r

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