Around 250 onshore wind projects already in development are likely to be
cancelled because the Government is ending subsidies which would aid their
completion, Energy Secretary Amber Rudd has announced.
The cancellation of subsidies for onshore wind offered under the Renewables
Obligation (RO) is likely to mean that 2,500 turbines which were due to be
built are scrapped, Ms Rudd said.
She said consumer bills will not rise and insisted the move would save
taxpayers hundreds of millions of pounds in subsidies that would otherwise
have been paid out to energy projects.
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Acting on a Tory manifesto commitment to scrap subsidies for onshore wind,
the Government is closing the RO to new projects from April next year.
Ms Rudd said a grace period was put in place, allowing projects which had
planning consent, a grid connection and land rights by June 18 to continue
to be supported under the RO.
But the 250 projects delivering 2,500 turbines do not meet this criteria
and are now “unlikely to be built”, she said.
The Energy Secretary told the Commons: “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.”
Ms Rudd insisted the plans would still allow the Government to meet its
2020 targets on renewable energy, with onshore wind around 10% of the
country’s electricity.
But she said Britain was “reaching the limits of what is affordable, and
what the public is prepared to accept.”
The Energy Secretary told MPs: “Clean energy doesn’t begin and end with
onshore wind.
“Onshore wind is an important part of our current and future low carbon
energy mix.
“But we are reaching the limits of what is affordable and what the public
is prepared to accept.
“We are committed to meeting our decarbonisation objectives, the changes I
have outlined to Parliament will not change this.”
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Shadow energy secretary Caroline Flint accused Ms Rudd of causing
“confusion and concern” over the policy and said she had been forced to
come to the chamber to clarify the situation.
She also claimed Ms Rudd was acting to appease “many of her backbenchers”,
including one making money out of a solar farm.
Ms Flint asked whether – as the changes to the rules will require primary
legislation – those projects that meet the criteria at the point Royal
Assent is given could be allowed to go ahead.
She added: “Despite the Prime Minister’s warm words on tackling climate
change in this most important year of global negotiations, this Parliament
has hardly begun but already the cheapest form of renewable energy is under
attack and other renewable investors are worried that they are next.
“I want our country to go forwards not backwards. This debate is not about
hot air, it is about jobs, manufacturing and investment opportunities at
risk across the sector.
“You need to convince us you understand what’s at stake in your answers today.”
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Ms Rudd said the policy had been “well set out” in both the Tory manifesto
and the Queen’s Speech and insisted she had chosen to come to the House.
She added: “We are committed to making sure that we deliver on our
decarbonisation targets.
“Just as importantly, we are committed to getting a global deal. We do not
want to do this alone. We need to provide leadership in the EU and
leadership internationally to make sure that the effort that we make is
truly leveraged so we can get that result at the end of the year.”
She told MPs a key reason for ending the subsidies now was because the
target of generating 10% of electricity from wind by 2020 is being reached
early.
She added: “Part of what we are trying to do is to encourage new energy
sources in order to meet our targets, in order to lead to cost reductions.”
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Stewart Hosie, the SNP’s deputy leader at Westminster, said the decision
was “simply wrong” and challenged Ms Rudd to publish a list of the jobs
lost and investment forgone as a result of it.
He added: “I think we are getting to the truth now. They (the Government)
simply don’t like renewables, they would rather see the costs of
decommissioning for nuclear passed onto future generations.
“Are you aware this decision has a disproportionate impact on Scotland and
puts investment at risk?
“Are you not concerned at all that currently £3 billion worth of onshore
wind projects in the pipeline in Scotland are at risk with so sudden a
closing of the RO?
“That would do incredible damage to investor confidence, not simply in
offshore wind but in the wider UK energy sector as well.
“Are you not concerned of the danger in a headlong rush to scrap subsidies
for onshore wind, the cheapest large-scale renewable technology?”
Mr Hosie also accused Ms Rudd of failing to “come clean” with the “proper
figures” last week.
He said that she originally said up to 5.2 GW of onshore wind capacity
would be eligible for the grace period but that it later emerged the figure
was 2.9 GW.
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In response Ms Rudd quoted Fergus Ewing, the Scottish Government’s minister
for business, energy and tourism, who she said commented in 2007: “Many
other forms of renewable energy are the future, not unconstrained wind farms.”
“I agree with him on that,” she added.
Earlier, in her speech, Ms Rudd said she was “particularly conscious” of
the fact that 68% of the onshore wind pipeline relates to projects in Scotland.
She said she would continue to consult colleagues in the Scottish
Government and would be meeting Mr Ewing on Wednesday.
Conservative John Redwood (Wokingham) said his party was the only one that
cared about the consumer and sought to get energy bills down.
Green MP Caroline Lucas ( Brighton, Pavilion) asked why the Government was
not tackling fossil fuel subsidies, “instead of slashing wind, one of the
most popular and affordable of the energy sources”.
Labour’s Ian Lucas (Wrexham) questioned the Government’s priorities –
cutting subsidies for renewables while increasing them for fracking.
Tory Peter Lilley (Hitchin and Harpenden) asked whether the Government
planned to make similar reductions to subsidies for offshore wind, to which
Ms Rudd replied: “We won’t be reducing those.”
Labour’s Barry Gardiner (Brent North) said the decision sent a message to
investors that the UK is not a stable regulatory regime in this area.
He asked whether Ms Rudd accepted calculations that show onshore wind is
not only the cheapest form of new low carbon energy, but that for every £1
of development costs, 98p is spent creating new jobs in the UK.
Ms Rudd said he had failed to incorporate the fact that the Government’s
support in the form of subsidies costs money.
She added: “The industry was not surprised by the outcome here. We
committed to ending these subsidies for onshore wind and that is exactly
the promise we have kept.”
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Tory Chris Heaton-Harris (Daventry), a long-time campaigner against onshore
wind, said the situation had become so bad in his constituency that it was
difficult to find people supportive of any form of renewable energy.
Mr Heaton-Harris said: “Do you understand how onshore wind subsidies and
developers have really gone about their business in such a way that they
have actually destroyed people’s faith in renewable energies as a whole?
“Indeed in communities in my constituency… you will struggle to find
people who support any type of renewable energy based on how they have been
handled by onshore wind developers.”
Meanwhile, Labour’s Andrew Gwynne (Denton and Reddish) asked how the
Government would replace the £1.7 billion onshore wind generates for the UK
economy in gross value added.
Mr Gwynne said: “Are you not just a little bit concerned of the impact on
investor confidence that this decision might have, not just in terms of
onshore wind but across the renewable sector?
“And given that onshore wind and its supply chain accounts for £1.7 billion
of gross value added, how do you anticipate filling that gap in investment?”
Ms Rudd said investors will have been prepared for the end in subsidies as
Prime Minister David Cameron set out last year the Conservatives’
opposition to them, adding that renewable investment remains “at the front”
of the Government’s strategy.
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In exchanges on the statement in the House of Lords, Lord Birt, the former
director general of the BBC, warned the move would be “very damaging to
investor confidence”.
Lord Birt, a long-term adviser that to a fund that invests in renewable
energy, said the Italian government had “retroactively changed the solar
regime”.
“I get asked over and over again whether investors can have confidence in
the British Government grandfathering rights and showing consistency in
this area and this, I’m afraid, will rattle investor confidence in
renewables,” the independent crossbench peer said.
“Wind farms take a very long time – typically eight, nine, 10 years – to go
through a process.
“The announcement today will severely undermine the economics of many
companies that have already invested a very great deal in wind farms going
forward and can’t recoup that investment.”
Energy minister Lord Bourne of Aberystwyth, who had repeated Ms Rudd’s
statement, said more than £42 billion had been invested in renewables,
nuclear and carbon capture since 2010 and the move was “not retroactive”.
Tory former cabinet minister Lord Forsyth of Drumlean welcomed the move and
called for an end to the “racket” of biomass subsidies.
“I have seen the industrialisation of the countryside take place in
Scotland in a country that is absolutely dependent on tourism and not just
because of the windmills but also because of the huge electricity pylons
that are required to convey this across the countryside,” he said.
“You are ending the biggest transfer of wealth from the poorest in Scotland
to the richest in Scotland because of the fact that these subsidies which
are going to large landowners are on the bills of people who have to meet
the cost – and undisclosed.”
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