There aren’t many people concerned with UK politics who predicted a Conservative majority as the outcome from this year’s General Election. Given the exit polling data in the run up to the big day, there were even less people in energy circles who predicted the result.
For one section of the UK’s renewable energy market, a Conservative majority was the worst possible outcome. One of the Conservatives pre-election pledges was that it would not subsidise any new onshore wind developments in the UK.
The controversial pledge was met with dismay from the onshore wind industry, which pointed to the Department of Energy and Climate Change’s own polling data that showed that 65% of Brits support the development of onshore wind in the UK.
Former Tory energy minister, Michael Fallon said: “Renewable energy, including onshore wind, has a key role in our future energy supply. But we now have enough bill payer-funded onshore wind in the pipeline to meet our renewable energy commitments and there's no requirement for any more.”
The Conservatives’ move was confirmed in the Queen’s Speech which said that details over a changes to subsidy regimes for onshore wind farms will be detailed in the future. However, the government has confirmed that it will “consult with the Devolved Administration” over any changes – something that Scotland’s first minister, Nicola Sturgeon called for in the aftermath of the election result.
The Queen’s Speech also confirmed that the Conservatives would introduce new planning rules for onshore wind only. The new rules would see all planning decisions for onshore wind projects over 50MW devolved to local authority level. The move means that onshore wind farm developments are the only large energy infrastructure projects that will be determined at a local level.
Maria McCaffery, chief executive of RenewableUK, a trade association for onshore wind, hit out at the treatment being handed down to one particular technology. “Singling out one of the most popular and lowest cost forms of energy technology for different treatment in the planning system sends a worrying message to investors across the energy sector,” says McCaffery.
She continues: “Onshore wind is committed to being a good neighbour to the local communities in which it is hosted, providing substantial economic advantages to the region including the ground-breaking community benefits it pays, so we are confident that Local Authorities should recognise the value of these projects. However, we do hold concerns for the potential for delay of these significant infrastructure projects, so it is very important that Local Authorities are given full support and resourcing to enable them to make swift decisions.”
Image credit: Good Energy
Non-competitive competition
Onshore wind’s troubles make the second allocation round for the contracts for difference (CfDs) even more interesting than it was before.
The first allocation round saw solar PV compete against onshore wind. Onshore wind clearly did much better out of the first auction round – securing contracts for almost 750MW of new capacity compared to solar’s paltry 72MW.
The three solar PV projects that successfully bid for CfDs shared a clearing price of £79.2/Mwh for 2016/17 with onshore wind. However, onshore wind also secured funding in 2017/18 with a strike price of £79.2/MWh and 2018/19 with a strike price of £82.5/MWh.
Given Conservatives’ plan to restrict the planning process for onshore wind farms by devolving responsibility to the local council, you’d be forgiven for thinking that solar could fare much better in the second CfD auction round. However, of the 15 onshore wind projects that won a CfD, only two were above 50MW and therefore qualify for a local council decision.
One crucial aspect of the Tory pledge to curb onshore wind developments that has yet to be revealed is how exactly it will ‘end all subsidies for new onshore wind’. The government has already confirmed that it will be ending RO support for onshore wind one year early and has hinted that it will take steps to remove onshore wind from the CfD auction too.
Given that the CfDs are structured to deliver the lowest possible cost renewable energy by forcing different technologies to compete against each other, how can the government possibly justify leaving out the current cheapest technology? And, if it does, expect numerous legal challenges to land on the steps of 3 Whitehall Place.
Fundamentally though, the new government is shooting itself in the foot by chasing after onshore wind – especially given the lack of serious polling data to suggest that voters are perturbed by the current rate and scale of onshore wind deployment.
It’s a point that is not lost on Alexander Creed, partner at Strutt and Parker who suggests that onshore wind is imperative in helping “ensure low energy prices whilst meeting the UK’s legally binding targets”. Creed concludes: “Government will need to re-assure the industry that wind will not be disadvantaged to traditional hydrocarbon industries in the North Sea.”
Nick Boyle, CEO of Lightsource Renewable Energy, the UK’s largest owner of PV assets and itself the winner of a CfD sympathises with onshore wind. He says: “Onshore wind certainly has its challenges and its challengers, whereas solar is a different proposition. Solar is a technology with 95% acceptance from the public at large and therefore the obvious choice to help achieve energy security both now and for generations to come. Solar doesn’t rely on third party feedstock as it draws on the most abundant natural resource there is – sunlight. At no point can we be held to ransom on cost or supply of raw materials.
“Energy security is an important subject for the UK and we see solar as a natural choice to help achieve it. Solar continues to deliver its year-on-year cost reductions and remains on its trajectory to reaching grid parity before 2020.
“The UK solar industry has already yielded great results, but we believe we are only just scratching the surface of the potential of solar energy applications. The continued application of both commercial and residential solar coupled with batteries and other forms of storage will allow solar to jump from an uncontrolled energy generator to a deliverer of base load electricity – giving the UK instant access to all the clean, green and home grown electricity it requires, whenever it requires it.”
All of this points to a much bigger problem, can the government really justify picking favourites from their own ‘established renewables’ pot? If Amber Rudd seriously believed that “man-made climate change is one of the most serious threats this country and the world faces”, then surely the government can’t justify kneecapping the most cost-effective way of generating low-carbon energy in the UK, can she?