UK: Dismay in renewables sector as Government performs yet another hand brake turn on energy policy

The Minister has announced that she intends to change the rules governing the Feed-In Tariff, so that the level of financial support for medium-scale onshore wind projects can no longer be guaranteed in advance. The renewables industry argues that this vital measure, known as “pre-accreditation”, provided certainty to projects while they were being developed, as they could bank on a certain level of support which would not be cut. Ms Rudd also announced a wider review of the Feed-in Tariff which also supports small-scale renewables.

RenewableUK’s Chief Executive, Maria McCaffery said “This announcement is yet another hand brake turn on energy policy. It will cause dismay in Britain’s medium-scale wind energy sector. Removing certainty will worry energy investors and can only increase the cost of developing renewable projects. Government knows this, but is pressing ahead regardless.

The Feed-in Tariff is a British success story, but continual rule changes and policy swerves will hurt. Local communities, farmers and small businesses will be hard hit by today’s announcement, and are being denied their opportunity to generate their own clean power and cut their energy bills.

The renewable energy industry is ahead of the Government in its desire to bring down costs - these have fallen dramatically and will continue to plummet. Onshore wind is already cheaper than new nuclear power and is on course to be cheaper than new gas by 2020. Offshore wind costs have fallen by 11% in the past 5 years.

We need the industry and Government to agree on a long term strategy with financial support being reduced gradually and appropriately over a clearly set out timescale – not short-term changes coming out of thin air”.

RenewableUK also argues that the Government is trying to justify its changes by citing statistics which over-estimate the amount of financial support needed for renewable energy under the Levy Control Framework. Ministers are quoting the OBR’s Economic and Fiscal Outlook, which published estimates on the costs of all environmental levies earlier this month, but did not explain its methodology.

Maria McCaffery commented: “If investors are to have confidence in forecasts then the Government needs to show its workings. Industry is committed to delivering much-needed low-cost carbon energy within the available budget and the Committee on Climate Change agrees that there is enough funding in the Levy Control Framework to meet our renewable energy targets, so Government needs to be clear about its own calculations as well as how many renewable projects it expects to connect between now and 2020”.