The end of onshore wind subsidies: what now for ‘secure, affordable and low-carbon’ electricity?

 

wind

On Thursday, the government announced that it would be ending subsidies for onshore wind under the Renewables Obligation a year earlier than planned, in April 2016. There are also plans to give local communities a veto over new wind farms, in line with Conservative manifesto commitments. By removing support for one of the UK’s most cost-effective low-carbon generating technologies, this decision could make it far more difficult to achieve DECC’s stated aim of a ‘secure, affordable and low-carbon energy system’, and illustrates DECC’s complete lack of decision-making power. The announcement was met with consternation from some quarters, and confusion from others. The Scottish government said that the plans are “irrational” and “deeply regrettable”, whilst industry body Scottish Renewables said the move would put many of the 5,400 jobs in Scotland’s onshore wind sector at risk, according to the Financial Times.

Carbon Brief, meanwhile, notes that there is considerable uncertainty around the interaction between the new Contracts for Difference (which were designed to replace the Renewables Obligation) and the Conservative manifesto commitment to end subsidies for onshore wind. Amber Rudd stated that “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”. Such vague statements can surely do little to appease the rampant uncertainty which is currently flying around amongst investors.

This uncertainty creates an additional challenge for the UK wind industry, some sectors of which seem to feel that they are facing extinction. A friend of mine told me in April 2014 that he had started looking to change sector, because his contacts in policy circles had advised him that the industry had less than a year left; advice which now seems spookily prescient. Another contact in the industry is selling his house and leaving the UK.

My own reaction to this announcement was a sort of grim resignation as the machinations of power made themselves known. Without attempting to appear too politically partisan, the initial appointment of Amber Rudd as Energy Secretary seemed to be one glimmer of hope within the new Conservative cabinet (especially when compared to the appointment of everyone’s favourite minister Michael Gove as Justice Secretary; but maybe the less said about that, the better…). Ms Rudd has previously stated strong commitments to reducing the UK’s carbon emissions, and has stated that she intends to push for a strong global agreement in Paris in December. There was hope here that the new government might pursue a practical and sensible approach to creating a secure, affordable and low-carbon energy system.

More importantly, Ms Rudd has even stated her support for onshore wind in the past. Here is a quote from a letter I received from her in March of this year:

“Onshore wind is one of the most cost effective and established technologies so it makes sense to use it. Studies indicate that the UK has one of the best wind resources in Europe, and of course the wind itself is a free and unlimited source of fuel, so it protects customers against the volatile but generally increasing cost of fossil fuels. It is also reliable, with the likelihood of low wind speeds affecting 50% of the country occurring for less than 100 hours per year.

“We are clear that onshore wind must remain part of our diverse energy mix, which will also include conventional gas and other forms of low-carbon generation. Onshore wind is a cost-effective, low-carbon technology that can be deployed at scale now to help meet our energy security objectives in a low carbon way.”

Despite such seemingly unflinching support for onshore wind a couple of months before the general election, she spent just 42 days in office before unveiling plans which will effectively scupper the industry. Does anyone remember Norman Baker? The Liberal MP for Lewes was an outspoken critic of high-carbon fuels for much of his long stint as MP; yet within 18 months of being appointed Under-Secretary of State for Transport by the Coalition government, it came to light that he had been in secret talks with the government of Alberta about watering down EU fuel quality rules in order to import oil from the tar sands into the UK. I feel a disturbing sense of déjà vu…

Furthermore, Ms Rudd then appointed Guy Newey as her special advisor. As previous head of policy at Ovo, Mr Newey is one of the last people you would generally expect to be advocating the scrapping of onshore wind. I don’t claim to have any insider knowledge of how and why the decision to end onshore wind subsidies was taken, but to me the dichotomy between this decision and the previously expressed views of Ms Rudd and her special advisor is a clear illustration of just how little say DECC have had over this decision. DECC have been relatively sheltered from department budget cuts (especially compared with their sister department Defra, which is struggling beneath punitive cuts), and to me it makes sense that the new Energy Minister is avoiding putting her head too far above the parapet so soon after entering office. It’s just a shame that this will result in the loss of the UK’s most cost-effective renewable generating technology; not to mention many peoples’ livelihoods.

Therefore the question remains: wherefore now DECC’s policy commitments? Over the past few years, energy policy has increasingly focused on meeting the ‘energy trilemma’ – creating an energy system which is secure, affordable and low-carbon. There can be little doubt that this is a hugely challenging task; but nevertheless, cutting support for the most cost-effective low-carbon generating technology seems like an odd place to start. The results from the Contracts for Difference auctions showed just how expensive it could be to make up the difference with offshore wind, which was awarded strike prices well above those of onshore wind; even new nuclear power has been awarded a higher strike price than onshore wind. Furthermore, it is clear that this is not simply about a trade-off between cost and decarbonisation objectives. One of the core strategies for ensuring energy security is maintaining investor confidence, otherwise the required investments in generating capacity will simply not materialise. Allowing politics to trump pragmatism in such a blatant way creates massive uncertainty, and sends a signal to investors that the UK is lacking in the kind of long-term political stability which is required to make investments in costly, long-lasting energy infrastructure; this is the case not only for the wind industry, but for other forms of generation and networks as well. This decision risks endangering not only the decarbonisation and affordability agendas, but the security imperative as well.

About the author:

Emily Cox PhD researcher

Emily Cox

Emily Cox is a PhD researcher with the Sussex Energy Group at the University of Sussex, researching electricity security in the context of a low-carbon transition. She is developing a methodology which can be used to assess low-carbon transition pathways for their resilience, affordability and sustainability. She has recently worked for the Royal Academy of Engineering, undertaking research for the Council of Science and Technology into the social and economic impacts of electricity shortfalls. She has also spent time working for E.ON Technologies at the Ratcliffe-on-Soar power station, carrying out policy research into energy security, district heating, distributed storage, and the new UK Capacity Market. Emily is an Associate Tutor at the University of Sussex, tutoring an MSc in Energy Policy and a new BSc elective in energy transitions. She has also worked for a variety of NGOs, including as a regional network coordinator for Greenpeace; as such, she has tackled energy issues from within a broad spectrum of sectors including industry, academia, policy and civil society. She holds an MSc in Climate Change and Policy, a BSc in International Relations, and half of a rather ill-advised BA in music.

 

 

 

 

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  1. […] The announcement dashed hopes that Rudd’s appointment might signal a serious, sensible approach to reducing carbon emissions. Critics said the move could put thousands of jobs at risk and makes it even less likely that the UK would meet its renewable energy targets for 2020 and beyond, for which Carbon Brief suggests the country is already behind schedule. […]

  2. […] The announcement dashed hopes that Rudd’s appointment might signal a serious, sensible approach to reducing carbon emissions. Critics said the move could put thousands of jobs at risk and makes it even less likely that the UK would meet its renewable energy targets for 2020 and beyond, for which Carbon Brief suggests the country is already behind schedule. […]

  3. […] The announcement dashed hopes that Rudd’s appointment might signal a serious, sensible approach to reducing carbon emissions. Critics said the move could put thousands of jobs at risk and makes it even less likely that the UK would meet its renewable energy targets for 2020 and beyond, for which Carbon Brief suggests the country is already behind schedule. […]

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