The onshore wind industry faces great uncertainty following the announcement by energy and climate change secretary Amber Rudd that its place in the so-called Renewables Obligation will end in 2016.
While understandably shell-shocked by the collision with reality, companies can scarcely claim to be surprised. The Tory manifesto spelt out quite clearly that they would end subsidy for onshore wind even if the reasons had more to do with votes in southern shires than the imperatives of energy policy.
What Rudd has announced so far is relatively modest. The Renewables Obligation was due to end anyway in 2017. Where her statement was pretty brutal was in drawing an immediate line under projects which, at that point, had both planning permission and grid connections.
Now that the headlines are behind her, Rudd may yet deem it prudent to display more flexibility than this deadline suggested. After all, the same people who invested in onshore wind are expected to invest in other branches of energy which are still “open for business”. She has to be careful about the signals of capricious uncertainty which she transmits.
Beyond that, there is still much for the onshore wind industry to play for. Generalised political denunciation does nobody any good in pragmatic terms but reasoned argument should have a chance of prevailing, on grounds of equity and fairness.
The next big question is whether onshore wind will be excluded altogether from “Contracts for Difference” (CfD), the system which will replace the RO in supporting renewables. Actually, this change represented a more fundamental policy switch in the 2012 Energy Act, even if it attracted less widespread attention, though it was covered in this publication.
It was the switch to CfD which terminated the open-ended principle for renewables subsidy. All projects and technologies must bid into limited pots with those making the lowest claims on subsidy emerging triumphant while the losers either can try again or abandon their projects.
The working assumption is that CfD for onshore wind will go the same way as the RO. But that corner deserves to be fought. There will still be good onshore projects, with public support, requiring relatively modest subsidy and it would be a step too far to exclude them from the right to bid into CfD.
This really would spell the end for onshore wind projects of any scale on the Scottish mainland even where there is public support. I fully agree that subsidy cannot be open-ended and was never intended to be but a total halt to new onshore wind subsidy is disproportionate.
Rudd has, however, been more encouraging towards stranded projects on the three islands groups, Shetland, Orkney and Western Isles.
The sole objective of these places must now be to be treated as a separate category – neither onshore nor offshore but halfway in between; requiring a level of subsidy which is lower than offshore but reflects the need for connections to the mainland.
This is what has been needed for the past decade and more in order to break the SSE and Ofgem-contrived logjam. Yet it has proved impossible to put the various elements together at the same time in order to get a sensible answer.
Now, with the threat to all onshore wind subsidy crystal clear, there is no more time left for messing about. Either the three islands groups are treated differently or else they will go down with the rest. Rudd seems capable of making that distinction and should be encouraged to do so.
Years were wasted on political moaning about transmission charges as they affected Scotland in general or even the Highlands & Islands in particular. This sounded too much like special, and indeed rather greedy, pleading because the evidence of our eyes showed that onshore projects were being delivered ten-a-penny irrespective of the charging regime.
The islands situation was totally different and should always have been treated as such. Now that distinction must be drawn if anything is going to happen in these places.
And the “anything” required is the funding of interconnectors which can only be achieved through subsidy and charging regimes which reflect the additional costs involved.
We have heard ad nauseam about the “Saudi Arabia of renewables” which our islands’ groups are at the epicentre of. Yet very little has happened and unless the interconnector issue is resolved now, within the revised framework of support for renewables, then it will be a very long time until anything might happen in the future. The resource will have been squandered.
The other sub-sector in which Rudd had some encouraging words to offer involved small-scale community projects which are dependent on “feed-in tariffs”.
This really does matter because, although the sums of money involved are chickenfeed within the overall context of energy subsidy, the revenues which accrue are hugely important to local communities.
As the largest political party representing Scottish interests, the SNP has an obligation to engage constructively in these crucial outstanding issues, rather than offer nothing more than simplistic denunciation for political reasons.
Casting Rudd as the devil incarnate for fulfilling her party’s manifesto commitment will not save a single project or protect a solitary job.
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