UK plans to end onshore wind subsidy programme a year early

[LONDON] The UK proposed to cut subsidies to new onshore wind projects a year early, raising doubts that the new government is committed to cutting carbon emissions at the lowest cost.

The Renewables Obligation programme will close to new onshore wind farms next April under plans published Thursday by Energy Secretary Amber Rudd. As much as 5.2 gigawatts of projects already planned may be eligible for a grace period, the government said in a statement.

"We want to help technologies stand on their own two feet, not encourage a reliance on public subsidies," Ms Rudd said. "We are driving forward our commitment to end new onshore wind subsidies and give local communities the final say over any new wind farms."

Ms Rudd is meeting an election pledge by the ruling Conservatives to end assistance for new onshore wind, a move criticized by the clean-energy industry for halting funds to the cheapest form of large-scale renewable power. In a separate statement, Ms Rudd said she's also looking at cutting new subsidies to onshore wind under the government's contracts-for-difference, or CfD, program.

Thursday's decision "sends a chilling signal not just to the renewable-energy industry but to all investors right across the UK's infrastructure sectors," said Maria McCaffery, chief executive officer of the RenewableUK lobby. "This government is quite prepared to pull the rug from under the feet of investors even when this country desperately needs to clean up the way we generate electricity."

The subsidy system requires energy companies to hold increasing numbers of Renewable Obligation Certificates, or ROCs, each year to show they derive a portion of their power from renewables. Last year, the industry received 800 million pounds (US$1.3 billion) of assistance and produced 5 per cent of Britain's electricity.

The programme "has encouraged an industry to mature," Gordon MacDougall, managing director of Renewable Energy Systems Ltd, a wind developer, said in a BBC radio interview. "As we're reaching the trajectory to get ourselves to parity, what we're seeing is a political intervention to cut that off."

Ms Rudd told BBC radio that the UK remains "committed to decarbonizing" power production and that the announcement was flagged in the party's manifesto.

More than 50 per cent of onshore wind projects awaiting planning permission are in Scotland. The region's energy minister, Fergus Ewing, said Rudd's proposal may be subject to a judicial review.

"It is not the scrapping of a new subsidy that was promised but a reduction of an existing regime - and one under which companies and communities have already planned investment," he said.

Two other programs subsidise wind: CfDs, which guarantee a set price for electricity from different sources, and feed-in tariffs, which provide top-up payments for smaller and domestic- scale projects.

"With regard to CfDs, we have the tools available to implement our manifesto commitments on onshore wind and I will set out how I will do so when announcing plans in relation to further CfD allocations," Ms Rudd said. "I will also shortly be considering options for continued support for community onshore wind projects through the feed-in tariff."

The UK has installed more than 5,000 onshore turbines, according to RenewableUK. The technology has attracted the ire of countryside groups and some Conservative lawmakers who say the machines blot the landscape.

Ms Rudd's ministry in February published the results of the first competitive auction under the CfD program, awarding contracts to 15 onshore wind projects priced mainly at 82.50 pounds a megawatt-hour, about double the price now. Two solar projects came in at 50 pounds a megawatt-hour.

BLOOMBERG