Earlier end to Onshore Wind Farm Subsidies in the UK

23rd June 2015

The government has announced that new onshore wind farms will be excluded from a subsidy scheme from 1st April 2016 – effectively bringing the date forward by 12 months.

It is important to point out that this announcement relates to the subsidy which comes from the “Renewables Obligation” which is funded by levies applied to household fuel bills.

“Wind Farms” rather than “Wind Turbine” are also terms which are often confused. As the names suggest a wind farm refers to a number of large scale wind turbines on one site. A wind turbine is generally a single turbine of smaller scale often undertaken by individual landowners rather than developers.

There is to date no announcement on the FIT (feed in tariff) subsidy which is currently available for smaller schemes (generally sub 5 megawatts).

The recent announcement has caused a great deal of consternation in the “Big Wind” sector with leading industry figures expressing their concerns over the potential impact it will have. Large scale wind farms are notoriously complex and difficult to get through the planning system and can often take several years to complete. This being the case there will be several schemes which will have been working on the basis of subsidies available until April 2017, as originally planned! Westminster’s position for the future of “onshore wind farms” is clear; they are not part of their next five year plan, with recent actions making it extremely difficult for development projects to succeed.

Particularly in Scotland where 70% of the UK’s large scale wind developments are either operational, being developed or in the planning system, the potential cost could be in the region of £3 billion. Fergus Ewing the Scottish Minister for Business, Energy and Tourism advised the recent announcement could be subject to Judicial Review.

On a smaller scale the popular 500kW size single turbine schemes remain viable in the right locations. Although the locations are fewer, mainly due to grid constraints there will still be suitable sites. Interestingly the termination of the “Renewables Obligation” subsidy in April next year may release some grid capacity which is currently taken up by large scale schemes and may drop out due to this recent announcement. Planning risk has increased with the introduction of new policy guidance devolving decision making powers to local communities. The industry must adapt its approach making community and political engagement a major part of its approach.

There is no doubt the new government has made their position clear. This has opened a window of opportunity for the “FIT” scaled project, but for how long?

 

X