Wind farm subsidies draw to a close

Author: Caroline Lockyer  – Glenigan's utility sector expert

What does this mean for the industry and how will this effect climate change targets and our green future?

Energy firms were expecting onshore wind farm subsidies to draw to a close in 2017, so last month’s announcement, just over a month into the Government’s new term, has left the sector without encouragement. The announcement confirmed rumours from April 2014 that the subsidies could be scrapped by the Conservatives. 

The Conservative’s manifesto held the promise of increased renewable energy, which takes the form of onshore and offshore wind farms, solar farms, biomass and energy from waste, to name a few. 

Last year the same Government announced it was to limit subsidies for solar farms over 5 megawatts from April 2015. This saw a rush of solar farm planning applications being submitted and built up to this point, but what is in store for onshore wind farms now?

The longer lead in and construction times required for wind farms means there is unlikely to be a repeat of the ‘solar rush’ seen last year, with starts of projects already planned likely to hold steady before tailing off after April 2016. 

The government has announced a ‘grace period’ for projects which had already received planning consent, a grid connection offer and acceptance and evidence of land rights by June 18th 2015, which will allow them to receive subsidy support even if affected by the early closure of the RO scheme. However further details or timescales have been less clear. 

By the Government’s own estimates, 7.1GW of proposed wind capacity will not meet these requirements and will now not be built as a result of the changes; equivalent to 250 projects and 2,500 turbines. 

Onshore wind is actually the most economical form of clean energy for the UK, so has the energy subsidies programme run out of money? The decision is being viewed by business leaders as curious, to say the least. 

In 2009, the Labour Government unveiled sweeping plans to transform the UK into a low carbon economy. Amber Rudd, the current Energy Secretary and Conservative MP for Hastings, has said "she is committed to transforming the UK into a low carbon economy"! She has also said about the Conservatives "we are driving forward our commitment to end new onshore wind subsidies and give local communities the final say over any new wind farms".

But a now well established and DECC backed initiative called community benefit fund gives communities hosting wind farms benefits of £5,000 per MW of installed capacity. These funds can be used to finance benefits the actual community deem appropriate and necessary for their areas.

So, while Amber Rudd is sounding as if she’s giving these communities more power to object, the planning processes remain resolute, still giving everyone the same chance of an opinion. 

There has been much investment from European and Scandinavian companies into this element of the renewable energy business, particularly the manufacturing and supply of turbines. Over the last three or four years, applications have appeared in the national press for the manufacture of wind farm elements within the UK. Siemens are proposing such an industrial development at Green Port in Hull. Seemingly rather presciently, this is being built to supply the off-shore wind market. While the future for UK manufacturing remains bright, future opportunities are more likely to be out at sea than on land.