The head of the body representing Scottish renewable energy firms has warned that cuts to subsidies for onshore wind projects will stop several planned schemes from going ahead.
Onshore wind and solar projects are the biggest losers among the changes to strike prices announced today by the Department for Energy and Climate Change.
Offshore wind projects will benefit most, but Niall Stuart, chief executive of Scottish Renewables, said the new tariffs would not necessarily guarantee a boost for the industry in Scotland.
“We’re pleased that the Department of Energy and Climate Change has taken on board the evidence that offshore wind support cannot be cut as quickly as they had proposed,” he said.
“However, we are still at the earliest stages of developing offshore wind technology and scaling up the industry, and even if projects get consent there is no guarantee that schemes will proceed with the level of financial support outlined.”
Onshore windfarms and solar plants will receive £95 – £5 less than current payments – for every megawatt hour generated between 2015 and 2017, with that falling by a further £5 from 2017 to 2019.
Offshore wind generators will receive the same payment from 2015-2016, at £155 per MWh. From 2017 until 2019, offshore operators will receive £140 per MWh – a rise of £5 on the previous plans.
Payments for hydroelectric projects, tidal, wave and biomass will remain constant between 2014/15 and 2018//19.
The government said the final strike price terms would generate green energy for 10million homes, and support up to 200,000 jobs by 2010.
But Stuart warned that the cuts to onshore projects, as they look to compete with fossil fuel providers, could have a knock-on impact on hitting renewable energy targets.
“The sharper than expected cut to onshore wind will present a real challenge to developers, and could well mean that some projects don’t go ahead, slowing down progress towards our 2020 renewables and climate change targets,” he said.
“It will also present a serious challenge to many communities seeking to take forward their own developments, and means that only the most competitive and productive sites will proceed.
“It’s important we remember that onshore wind is the cheapest renewable electricity source that is being deployed at scale and is expected to play a major role in us meeting our ambitious 2020 target of generating the equivalent of 100% of our electricity from renewable sources.
“It’s also the technology that has driven the most investment into this country and has been vital in providing the necessary financial stepping stone investors need in order to move towards building offshore wind, wave and tidal farms.”
The government said the final strike price terms would generate green energy for 10million homes, and support up to 200,000 jobs by 2010.
“The strike prices and contracts give energy generators a sound, sustainable and long-term basis to invest in renewable energy,” said energy secretary Ed Davey.
“They reinforce the UK’s position as one of the world’s leading renewables markets, and the number one place for business to invest in offshore wind generation.
“This will support the growth of the offshore wind industry, with modelling showing that deployment of 10GW by 2020 is achievable, in line with the previously stated range of 8-16GW. This is not a target and actual deployment will depend on technology costs
Despite the cuts in strike prices, however, the Government insisted onshore wind still had an important role to play in the UK’s energy provision, with at least 30% of UK electricity to come from renewable sources by 2020.
Greenpeace policy director Doug Parr said: “Today’s cuts to onshore wind and solar support schemes show how quickly the cost of clean energy technologies are falling.
“Onshore wind farms will power our homes and factories more cheaply than new nuclear stations, and the same is expected of solar.
“Given the increasing affordability of these renewable energy sources, it’s right ministers should now put emphasis onto helping drive down the cost of offshore wind so that the UK can reap the rewards of new turbine factories and thousands of new jobs.”
See the full list of strike prices below
“Onshore wind is going to continue to play a big role,” said Danny Alexander, chief secretary to the Treasury.
“I believe passionately in meeting this country’s obligations to tackle climate change and meeting our environmental commitments.
“But we should be doing so in the most cost-effective way we can and we should also be making sure that industries where the UK has a vast potential, like offshore wind, get the support they need really to take off.”
Onshore wind projects have proved a controversial subject, both among the coalition partners and communities across the UK.
Industry body RenewableUK said the 10GW target would be achievable if the offshore industry is given support, but warned that the cuts to onshore wind strike prices would have a knock-on effect on small-scale community projects.
“Obviously any reduction in support for onshore wind is unwelcome, and the Government had promised that any drop would be based purely on economic evidence,” said the group’s deputy chief executive, Maf Smith.
“Onshore wind is the most cost-effective form of renewable energy we have, so if we want to keep energy bills as low as possible, we need to ensure the level of support is right.
“Our challenge to Government is that it must work with industry to help us to reduce costs and support the right projects. The reduction means that some smaller projects such as community led schemes will be lost.
The head of trade body the Renewable Energy Association said the prices represented a good result for renewable energy and heat suppliers, despite the cuts to onshore wind and solar.
“The big picture here is that renewables are the only low carbon technologies which can help bridge the looming supply crunch – and yet Government has actually depressed its ambition for biomass and conventional waste to energy generation,” said REA chief executive Nina Skorupska.
“This means more coal and gas plants, keeping us very much hooked on volatile fossil fuel prices.
“The real test for EMR is in the policy design – not just the headline support levels.
“There is more work to be done to ensure that EMR works for independent generators as well as the big utilities. Independent generators help drive competition and innovation, and can also help communities invest in their own local energy projects.”
Andrew Jamieson, chief executive of the Offshore Renewable Energy Catapult scheme, which links seven technology centres, welcomed the support for offshore wind projects.
“It is now imperative for industry and academia to work collaboratively with government to bring innovation to the market, to develop consistent standards and improve reliability, and to drive down the long-term cost of offshore renewable energy,” he said.
“That is how the UK will realise the huge potential economic, social and environmental benefits that this industry can provide.”
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