Exclusive by Mark Latham, Deputy Business Editor
Hundreds of millions of pounds of investment poured into the development of
three proposed Scottish offshore wind farms over the last decade is at risk
because of continuing delays in securing vital government subsidies.
Years of planning has so far gone into five massive multi-billion pound
wind farms planned for Scotland’s east coast.
But only two of the windfarms – the 664MW Beatrice project and the 448MW
Neart Na Gaoithe project – have so far been successful in bidding for
valuable government subsidies, which make projects commercially viable by
guaranteeing the price at which electricity is sold for a 15-year period.
In the last Contracts for Difference (CfD) bidding auction held in 2014 the
three other windfarms (Seagreen, Inch Cape and Moray Offshore) were
unsuccessful and, since the Conservatives returned to power last May, no
further auctions have been held.
Michael Brown, chief accountant of the 1116MW Moray Offshore project, told
the Sunday Herald that £90 million has so far been spent by Portuguese
developer EDP Renewables on project development costs and that at least one
potential investor had withdrawn because of the extended funding uncertainty.
Since failing to obtain a subsidy contract in 2014, Brown said, the company
has had to maintain an Edinburgh office employing 40 people “who are doing
pretty much zero at the moment as the project is on hold”. “We are having
to spend several million pounds a year just to stand still,” he said.
Brown said it was frustrating that, although the UK government in November
said it would hold a further bidding auction, no budget or date have so far
been set, which makes it impossible for the company to plan ahead.
“We invested heavily in the initial stages of our project to be as
competitive as quickly as possible but there has been no reward for our
early enthusiasm. We narrowly missed a CfD in the first auction and we have
been waiting ever since,” he said.
While industry insiders are speculating that another auction could be held
towards the end of this year, the result is unlikely to be announced until
2017.
As consent to build the Moray project will expire if construction has not
started by March 2019, the worry is that the company will not have enough
time to secure investors and make a final investment decision if the next
auction is not held before the end of this year.
Lindsay Roberts, Senior Policy Manager at Scottish Renewables, said that
there was disappointment within the industry that only two of the five
offshore wind farm project have been able to secure contracts to allow them
to go to construction.
“Clearly there is frustration for the remaining projects,” she said. “Well
over a year after being granted planning they are still are waiting for
their opportunity to compete for contracts through allocation rounds for
which no firm dates have been set.
“It is now imperative that the UK Government commit as soon as possible to
a detailed timescale for the next round, and let developers know how much
money will be available in it.”
The UK has more installed offshore wind turbines than any other country in
the world with around 20 wind farms dotted around the English and Welsh
coasts totalling 5GW of installed capacity. This is expected to rise to
11GW by 2020, at which point it is expected to account for around 36 per
cent of global offshore generation capacity.
However, with the exception of a small number of test turbines on the east
coast there is currently only one small offshore wind farm partially in
Scottish waters, the 180MW Robin Rigg farm in the Solway Firth which is
connected to the National Grid in England.
Two of the five proposed Scottish offshore windfarms are in the Outer Moray
Firth (the Beatrice and Moray Offshore wind farms) and three east of the
Firth of Forth and the Firth of Tay (Inch Cape, Neart Na Gaoithe and
Seagreen). If all five are built they would have a combined capacity of
4062MW.
The neighbouring Beatrice and Moray Offshore wind farms off the Caithness
coast would involve a total of 326 turbines which, taken together, would be
the world’s third largest offshore wind farm: far larger than the
175-turbine London Array, which is currently the largest UK wind farm.
Small-scale green energy schemes take a hit from tariff cuts
New figures released to the Sunday Herald show that the electricity
generation subsidies paid to small to medium sized green energy schemes
will fall an overall 64 per cent when they are introduced next week.
David McGuire, a Glasgow-based solicitor with Scottish law firm MacRoberts,
is warning that new Feed-in-Tariff subsidies which were slashed by the UK
Government last month will mean that many small-scale wind developments in
the planning pipeline will no longer be viable.
McGuire believes that, while there will be a small number of winners (such
as the tariff for large-scale hydro developments which will rise 82 per
cent) most of the tariffs paid to the owners of solar, wind, hydro and
anaerobic digestion installations will be cut.
“Community schemes in particular will be hardest hit, as they are most
likely to fall foul of the strict new caps,” McGuire said. “Opportunities
remain, but largely for small-scale developments in the windiest places
with an easy connection to the national grid.”
“These are aggressive, ambush changes to the tariffs which will have a
significant impact on the renewable sector, jobs and investment but a
negligible impact on consumer bills.”
McGuire said that, before the changes, the tariffs paid for roof-top solar
installations would pay for themselves in eight to 10 years, but under the
new tariff it would take around 14 years.
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