The government has confirmed that there will be no new low carbon power levies until 2025, dealing a blow to new renewable energy generation in the UK.
Chancellor Philip Hammond was today expected to confirm the future of the Levy Control Framework, but instead documents published by HM Treasury confirmed that measures would be taken to protect consumers from the cost of supporting low carbon generation.
It has therefore come to the decision to enact new controls which will inhibit new low carbon electricity levies until “the burden of such costs is falling”.
Based on current forecasts, HMT expects this to be 2025.
The decision has been widely condemned from industry stakeholders and opposition MPs alike. Alan Whitehead, shadow energy minister, labelled the decision a “catastrophic shut down for most of Britain’s renewables industry”.
New Control for Low cCarbon Levies in budget looks like a catastrophic shut down for most of Britains Renwables industry. NO new levies until at least 2025, and no indication of alternative ways of underwriting. Means no new solar PV no new onshore wind, and no support for tidal.— Alan Whitehead (@alanwhiteheadmp) November 22, 2017
His concern was echoed by James Court, head of policy and external affairs at the Renewable Energy Association, who said the government seemed to be “turning their back” on renewables.
“This could see a hiatus in much needed infrastructure development. Considering this is coming only a couple of months after the much vaunted Clean Growth Plan, it’s hugely disappointing.
“The chancellor talked about embracing the future in his speech, yet hid away the details that he was blocking all renewables to market. Onshore wind and solar are already cheaper than new build gas, and we have seen huge cost reductions happening in offshore wind, energy from waste and biomass. These are the technologies of the future and the government should be backing them, not blocking their progress,” he said.
Although as Leonie Greene, head of external affairs at the Solar Trade Association, pointed out, it was not new public support that the solar industry is requesting.
“We urgently need just some of the tax breaks available to fossil fuels today. And the whole energy industry needs a clear signal to continue to invest in low carbon power. We also believe solar can win effectively subsidy-free clean power (CfD) contracts today, so we now hope to see clean power auctions for established technologies resume on that basis.
“The chancellor still has an opportunity to take a small step in the right direction by including solar under the eligible technologies list for Enhanced Capital Allowances in the Finance Bill, when it goes to the Commons,” she added.
The government’s document also stresses that it should not be considered a ruling out of future support for any technology, pointing to an existing commitment of £557 million for additional Contracts for Difference rounds.
It also argues that new levies may still be considered “where they have a net reduction effect on bills and are consistent with the government’s energy strategy”.
Such a policy could feasibly leave the door open for subsidy-free or market stabilising CfDs which would not entail any levies or subsidies being paid to generators.
Subsidy-free CfDs have long been billed as a possible way of supporting new-build solar or wind generation without incurring the kinds of levies that have historically been passed onto consumers.
There is also crucial wording in the wider Budget document that all existing commitments will be respected, meaning that there will not be retrospective action taken to remove subsidies from existing projects.