Blow to UK wind energy industry

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News article

Blow to UK wind energy industry

June 2015

renewable energy news

The 18 June 2015 marked a gloomy day for the wind energy industry as the Department of Energy & Climate Change (DECC) confirmed that the Renewables Obligation (RO) will close from 1 April 2016 – a year earlier than previously planned.

The RO has been the fiscal driver for commercial scale onshore wind development for the past 13 years since its introduction in 2002 when it replaced the Non Fossil Fuel Obligation (NFFO).  The supporting legislation has contributed to the erection of 5,061 onshore turbines in the UK which in 2014 generated over 18,000 gigawatt hours of electricity for the distribution network.  This is the equivalent of 5.6% of the country’s electricity needs and is enough to supply 5.5 million households for a year. 

The move follows the Conservative manifesto commitment to end support for new onshore wind projects and whilst not unexpected, represents a controversial early decision for recently appointed Energy Secretary Amber Rudd MP.

In a second blow to the industry, the Department for Communities and Local Government (DCLG) has announced how it intends to ‘give local people the final say’ over onshore wind farm applications.  This has involved immediate changes to guidance published in the National Planning Policy Framework (NPPF) and will apply to applications comprising a single turbine upwards.

DCLG suggest local planning authorities should only grant planning permission if the site is in an area identified as suitable for wind energy development as part of a Local or Neighbourhood Plan, and following consultation, the planning impacts identified by affected local communities have been fully addressed and therefore has their backing.

Darren Edwards, a Partner at leading renewable energy consultants Fisher German, said “today’s news is undoubtedly a blow to wind turbine developers in the UK and the implications are widespread – from the big six energy suppliers wanting to develop multi-megawatt schemes for national supply to the small farmer looking to combat rising electricity costs with a single turbine.

Whilst Amber Rudd may feel the suggested ‘grace period’ [which is expected to be for 12 months for projects with a planning approval and grid connection] softens the blow of the early closure of the RO (during which time it is anticipated a further 5.2 gigawatt’s of onshore wind capacity could be installed) in reality the financial impact of the move will be profound with Scotland alone estimated to lose out on £3 billion of investment.  What is being promoted as a move that will save UK bill payers money could in fact have the exact opposite effect, because onshore wind turbines are the cheapest form of renewable electricity.  The Government are keen to support offshore wind farms, but they are typically 50% more expensive.

All in all today’s announcement sends a worrying message about the stability of the UK’s energy policy framework and looks likely to discourage inward investment in what has been a positive growth area in recent years”.

Mark Newton, also a Partner in Fisher German, added “it is now going to be much more difficult for farmers and landowners who are financially struggling with low commodity prices across all sectors to diversify their business through wind turbine projects – the most cost-effective renewable energy source.  This alternative non-farming income and ability to future proof their business against rising energy costs is proving increasingly critical.”

For further information contact Darren Edwards on 01858 411236 email darren.edwards@fishergerman.co.uk or Mark Newton on 01858 411215 email mark.newton@fishergerman.co.uk

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