CONTACT US 01312268200

Subsidy Cut: Not Such An Ill Wind - So Far

Posted on Jul 25, 2012 by  | 0 Comments

This week’s announcement by Ed Davey the Energy and Climate Change (DECC) Secretary of a 10% cut in the subsidy for onshore wind is being interpreted as a victory for Davey in his fairly public wrangle with the Chancellor, George Osborne. Osborne was reported at one time to be seeking cuts of up to 25% for onshore wind. The delay in publishing the Renewables Obligation Banding Review has been widely criticised for the uncertainty that it brought to the industry so that this week’s announcement will be welcomed both for bringing that uncertainty to an end (up to a point - see below) and also for the fact that the 10% reduction in the onshore wind is as foreshadowed in the original consultation.

Energy suppliers are required to purchase Renewables Obligation Certificates (ROCs) as part of the requirement to purchase an increasing proportion of electricity from renewable sources. Banding was introduced in 2009 to provide a varied level of support to different technologies to take account of a number of different factors such as costs, relative maturity and potential for future deployment.

The banding review covers the full range of technologies including anaerobic, biomass conversion, energy from waste CHP (combined heat and power), tidal, landfill gas hydroelectric and others. The banding approach means that logically as renewable technologies mature and development costs fall the subsidy falls. To take one example the current support for anaerobic digestion of 2 ROCs per MWh will be maintained in 2013/2014 falling to 1.9 in 2015/2016 and 1.8 in 2016/2017. 

Scottish Renewables has welcomed the level of the cut in the onshore wind subsidy while expressing concern about the announcement of a further review later this year. The DECC announcement states “A call for evidence on onshore wind industry costs will be launched this autumn and report in early 2013. If the findings identify a significant change, the Government will initiate an immediate review of ROC levels with any new support arrangements taking effect from April 2014, with grandfathering and grace periods for projects already committed.” At least any changes would be based on facts rather than on the vociferous harrumphs of Tory MPs who simply don’t like the way wind farms look.

This week’s announcement covers England and Wales only but it is expected that the Scottish Government will announce similar levels of support. This would be in line with its stated intention at the start of its separate consultation process.

Adam More

adam.more@mbmcommercial.co.uk

0131 226 8223

Commercial Property

Becoming A Leader Others Want To Follow
Herald Scotland News Article: MPs Challenge Govern...

Contact us

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input

Contact us

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input
You must confirm you have read and accept our Website Privacy Policy.
Invalid Input