Small Onshore Wind Farms To Be Scrapped As Subsidies Are Cut
Wind farm developers will abandon several smaller schemes as a result of cuts announced yesterday to the subsidies for onshore turbines, according to the wind industry trade body.
Renewable UK said that “the politics” surrounding turbines was undermining investor confidence.
The Government redirected some of the subsidy previously earmarked for onshore turbines to offshore wind farms. Offshore turbines cost at least 50 per cent more per unit of electricity generated but are not as fiercely opposed by Conservative backbenchers.
Danny Alexander, the Chief Secretary to the Treasury, said that he wanted at least ten gigawatts to be generated by offshore wind farms by 2020, which would treble present capacity.
Offshore wind farm developers welcomed the small increase in subsidy from 2018 but suggested it would not be sufficient to persuade any turbine manufacturers to build factories in Britain.
The Government also cut solar energy subsidies, but the Solar Trade Association said that the amounts available from 2016 were higher than it had requested. This suggests that, although some projects will be delayed, many more solar farms are likely by 2020.
Ben Caldecott, senior analyst with Bloomberg New Energy Finance, said: “It is ironic that with the ongoing furore over energy bills, the Government is switching support to offshore wind, which is one of the most expensive technologies.”
Maf Smith, deputy chief executive of Renewable UK, said: “The reduction [for onshore wind] means that some smaller projects, such as community-led schemes, will be lost.
“The big concern we have is about the politics of the situation. If this cut has been made for political reasons rather than economic ones, that would be a worry. All politicians need to understand that uncertainty spooks investors and it is the consumer who bears that cost.”
Peter Atherton, a Liberum Capital analyst, estimated that, despite the cut in onshore wind subsidy, developers of larger onshore wind farms would still be able to earn a healthy 11.4 per cent return, compared with 12.2 per cent previously.