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Industry ‘dismay’ at DECC plans

UPDATE: ADBA says proposals will have a 'severe impact' on investment

Industry ‘dismay’ at DECC plans image

Trade association RenewableUK has expressed dismay at the announcement by the Energy Secretary Amber Rudd of more retrospective changes in the levels of financial support for clean energy.

Rudd has announced plans 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, as well as a wider review of the FiT.

“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.”

She said the FiT is a success story, but “continual rule changes and policy swerves will hurt”.

McCaffery added that industry and government need 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”.

R-UK also said the government is justifying its changes by citing statistics that 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.

McCaffery said: “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.”

The Anaerobic Digestion and Bioresources Association chief executive Charlotte Morton said: “FiT pre accreditation is vital for the ongoing success of the anaerobic digestion sector.

“Tariffs for AD are already being reduced, and deployment is falling as a result – so this change is unnecessary from a cost control perspective.

“The industry's long development times mean these changes would move the goalposts after the game has kicked off for projects in progress, which will have a severe impact on investor confidence.”

Good Energy chief executive Juliet Davenport said: “Ending support for solar power makes no sense at all.

“On one hand the government says it wants to keep household energy bills down by removing support for clean solar power, yet on the other promises massive subsidies to nuclear.

“We’d like to see the government looking at all forms of support, not just renewables, and creating a more transparent and fair regime across the whole market.”

Michael Grubb, Professor of International Energy and Climate Change Policy at University College London, said: “The entire energy industry is now concerned about the risk of a capricious and politicised UK energy policy, driven more by Treasury intervention than by the Department responsible.”

The renewables industry is “being penalised for success”, Grudd added. “This is a pivotal moment in UK energy policy, on which it is beginning to look like the UK has two governments.

“One is that pressing for strong international action on climate change, which signed an unambiguous cross-party pledge to phase out unabated coal, reiterated its carbon targets and which committed in its manifesto to deliver clean renewable energy as cost-effectively as possible.

“The other is a government which has moved to prematurely end supports for the cheapest of the UK’s main renewable resources, which has injected fear and uncertainty into renewable energy investors.”

Greenpeace head of energy campaign Daisy Sands said: “Cutting the subsidies now will see businesses go bust and investment dry up.

“The timing couldn't be worse as the sector is on transition to subsidy free and is cheap form of renewable energy.

“Jobs will go and emissions will stay higher at a time when policies and funding should be in place to ensure that people can participate in contributing to the UK’s diverse energy mix.”

REA chief executive Nina Skorupska said: “The industry is at a critical point as it seeks to reach grid-parity as quickly as possible yet retain the size and scale necessary to become a key contributor to the UK economy.

“We will be working with Government to ensure that the sector remains of a sufficient size, capable of delivering cheap, low carbon electricity up to 2020 and beyond.”

Image: R-UK

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