Wind farm industry thrown into disarray as UK Govt decision to axe onshore subsidies ‘will cause 000s of projects to be abandoned’

Wind farm, Whitelee, Sgurr EnergyA prominent firm of accountants has warned that thousands of onshore wind developments are likely to be abandoned following the announcement by the UK government that is will axe subsidies by 2016 – 12 months earlier than anticipated.

Shirley Mathieson, Inverness-based Head of Renewables at Saffery Champness, said: “Combined, these measures are likely to throw the sector into complete disarray.

“Many developers will have been working towards the 2017 deadline to ensure receipt of subsidy.  Now that has been removed, although it is understood that there will be a period of grace for those projects that have received planning consent.

“This change will involve the re-writing of budgets and forecasts for those who would have accrued for example rental income from planned developments, including communities, and equally those on the ground – farmers and landowners – who may also have a stake in such projects.

“Some developments may already have spent in the region of £1 million on the process, and have now, in minutes and an unprecedented U turn, had the rug pulled from under them.

“Likewise the move to make local communities in England the final arbiter over wind developments is bizarre when, for instance, their opinions with respect to other technologies – most notably fracking – will only be taken into account through the normal planning process.

“This might appear to work in favour of community wind projects, but it is unlikely that many of them will now be taken forward with the proposed subsidy cut unless they are already some way into development.

“We note the Minister’s statement that subsidies will now be shifted to other technologies, although there is no news as to what these may be or how and when they will be applied, and we look forward to that announcement.”

Meanwhile, Alan Shanks, Energy Partner at HBJ Gateley, a legal services company, said: “More detail on the parameters of the grace periods this announcement refers will be required before the impact of the changes can be fully assessed. What these contain will influence the likelihood and scale of legal challenge by the industry here.   

“But while changes to the timing and swiftness of the Government’s withdrawal of the Renewables Obligation Certificates (ROCs) is surprising, that it was coming is not. 

“The Conservatives warned the industry before the election that it would expedite the closing down of the current subsidy regime which is being replaced by Contracts for Difference (CFDs). These are presented as a more sustainable and proportionate market support mechanism. The only difference this announcement makes is to move that closing date one year forward to April 2016.

“Subsidies are always temporary in nature and are typically withdrawn when a market matures and is able to operate effectively. In this case, it is hoped that the grace periods will be designed so that a significant number of projects that would previously have qualified for ROCs will still be able to be delivered.”

Last night, the Scottish National Party demanded that Prime Minister David Cameron explain why he misled voters during the referendum campaign in Scotland regarding the UK government’s position on renewable energy.  

The UK government’s announcement this week to end new support for onshore wind projects could cost Scotland £3 billion in investment and threatens thousands of jobs, according to industry experts.

An SNP spokesman said: “ In a speech in February last year Mr Cameron cited the renewables industry as a key reason for Scotland to vote No.  

“He said that together we’re stronger to lead in the industries of the future. Take green energy. We have the wind and the waves of Scotland, decades of North Sea experience in Aberdeen and, with the rest of the UK, a domestic energy market of tens of millions of people to drive and support these new industries… This is what happens when we collaborate.

“In 2011 he directly cited UK government subsidies and renewable energy saying “vital industries like green technology” in Scotland could thrive, “But it will only do that if we keep our country together.  

“Labour echoed the same calls, in February 2014 Shadow Energy Secretary Caroline Flint said green power would “grind to a halt” if Scotland voted Yes.”  

(As first revealed in Scottish Energy News) First Minister Nicola Sturgeon has now written to Cameron urging him to reconsider and said the decision – announced without any consultation with the Scottish Government – goes against the spirit of the provisions in the Scotland Bill.  

MSP Rob Gibson condemned the UK Government cut in support for onshore windfarms and made clear that this was the latest claim from the No campaign in last year’s referendum to be proven false. He said last night:  

“The Tory plans announced earlier thi week are a huge threat to the renewables industry in Scotland – and represent a total betrayal towards people who were persuaded to vote No after being told that Scotland’s renewables sector was only safe if Scots rejected independence.  

“Time and time again we were told by David Cameron and his Labour allies in the No camp that Scotland’s wind energy sector was benefitting by having “the best of both worlds”, but now that claim has been proven to be totally false – and the thousands of jobs are at stake.

 “Scots were told our vast renewable energy potential could only be realised by UK subsidies, but now – only nine months on from the referendum – the UK government is pulling the plug on our burgeoning industry. The duplicity is totally unacceptable.  

“This is just the latest example of how people were told tales in order to get them to vote No. David Cameron and his ministers repeatedly said that the UK subsidies were needed to keep Scotland’s renewables industry alive – when in fact it now transpires they were planning to scrap them all along.”

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed