Scottish Energy Association: Decision to axe UK wind farm subsidies is mistaken

SEA logoLeading energy and business associations across the UK have criticised the Government decision to axe subsidies for onshore wind farms from April 2016.

Scotland’s First Minister Nicola Sturgeon announced last night that she will writing direct to Prime Minister David Cameron in protest. She will also raise the possible adverse employment and economic effects of removing the subsidies at the British-Irish Council summit in Dublin on Friday.

Hector Grant, Chief Executive, Scottish Energy Association
Hector Grant

Hector Grant, Chief Executive, Scottish Energy Association® – which represents companies with business in the renewable energy, fossil, nuclear and energy infrastructure sectors – said:

“The Scottish Energy Association can take a holistic view – recognising that Scottish, UK and global markets need a wide range of energy sources and solutions.

“This first major energy policy decision by the new Government – to remove existing subsidy through bringing forward the planned closure of the Renewable Obligation for onshore wind is, the Scottish Energy Association believes –  a mistake when judged against the trilemma in energy (low carbon, secure and affordable energy) and the economic impacts.

“Onshore wind provides the lowest cost form of renewable electricity, evidence from studies for DECC and the first auction under the Contracts for Difference make clear. 

“Curtailing the contribution of onshore wind will mean that meeting binding targets for carbon and renewable energy will add costs for consumers.

“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.”

Meanwhile, commenting on the changes to the Renewables Obligation scheme announced by the Department for Energy and Climate Change, Katja Hall, CBI Deputy Director-General, said:

“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.

“It is right that an appropriate grace period is put in place to account for projects where significant investments have already been made. The Government must now work closely with industry to get the details right.”

Ben Warren, Energy Corporate Finance Leader at EY, commented: “The Government’s announcement of its plans to scrap subsidies for onshore wind comes as little surprise for many in the industry.

“The rationale behind it is that the UK has enough onshore wind capacity to help it meet its targets. This ignores both the fact that onshore wind can, and already does, provide cost effective power, as well as the economic, social and environmental benefits that stem from it.

“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.”

Juliet Davenport OBE, Chief Executive, Good Energy (which supplies only renewable electricity)  said: “It is very disappointing that the new government is to reduce support for the cheapest large-scale renewable energy – onshore wind.

“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.

“This announcement will undermine growth, investment and jobs in a sector which is helping to introduce more competition and new players into the energy market.

“Onshore wind developers, including many British companies, have invested millions of pounds in good faith based on the government’s original timetable. This decision will bring further instability and uncertainty to investors and is transactional government at its worst.

“Onshore wind offers the opportunity for diversifying investment in energy, bringing with it the potential for job creation and further investment. Wind developments also support the growth of small-scale independent generators as well as communities who want to generate their own clean energy, have viable alternatives to the Big Six and reduce their energy bills.

“Renewable technologies need a stable policy framework from which to grow. They do not need another retrospective policy decision, changing goalposts and associated uncertainty.

“This will serve only to stifle investment, growth, competition and ultimately, the opportunity to make a meaningful low-cost, low-carbon contribution to the UK’s longer-term energy security.”

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