REG to sell business following ‘profound impact’ of policy changes

Renewable Energy Generation (REG) has announced plans to sell its entire business due to the “profound impact” of policy changes enacted by the Conservative government since the general election.  

The business is to be sold to BlackRock for £64.5 million pending shareholder approval after an offer was announced to the board on 9 October 2015.

REG has claimed the decision to sell is a result of the government’s “process of dismantling green incentives”, which began on 18 June when it was announced that onshore wind farms would be excluded from the Renewables Obligation (RO) a year early. In the weeks following this announcement, propose cuts to the feed-in tariff (FiT) and contracts for difference (CfD), stricter planning rules for onshore wind farms and the elimination of the climate change levy (CCL) exemption for renewable generators have led to REG reconsidering its future in the UK market.

In a statement released as part of the announcement of sale, the company said: “Any one of these factors alone would have a significant impact on the group but, taken together, the impact is profound.”

REG has also claimed that policy changes since May 2015 have contributed to a deterioration of investor confidence in the renewables sector. It claimed the removal of sub-5MW ground-mounted solar projects form the RO from April 2016, the elimination of pre-accreditation from the FiT and proposals to lower the scheme’s tariffs have adversely impacted on the Group’s existing and future business opportunities.

In further criticism of the Government’s decisions in recent months, the directors of REG have also claimed that proposed legislative and planning changes have further impacted the willingness of the banking sector to provide long term debt.

REG currently operates 16 onshore wind farms generating 80.7MW, as well as one 4.5MW solar farm in Cornwall. It has a number of solar sites across the UK either under construction or awaiting approval and it is unclear what plans will be put in place by BlackRock for these sites should the sale be finalised.

Shareholders’ approval is to be sought at an extraordinary general meeting on 18 December, with completion of the sale due on 23 December.