Onshore wind escapes the worst of mooted cuts, but uncertainty could still threaten green investment, industry figures warn
New subsidy rates have been announced for renewable energy in the UK, with onshore wind escaping the worst of the mooted cuts, but worries about further uncertainty would still threaten green investment, industry figures have warned.
The Department of Energy and Climate Change (Decc) predicted that the new subsidy deal – with “banding” of different rates for technologies including wind, biomass and tidal energy – would stimulate £20bn to £25bn of investment into the green energy sector over the next four years.
Edward Davey, secretary of state for energy and climate change, said: “The support we’re setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and shows the key role of renewables for our energy security. Because value for money is vital, we will bring forward more renewable electricity while reducing the impact on consumer bills between 2013 and 2015, saving £6 off household energy bills next year and £5 the year after.”
The government’s decision came after months of wrangling between Decc and the Treasury, which broke out into open warfare over the weekend. Davey claimed a partial victory when Treasury demands for deeper cuts were blocked, but failed to head off a potentially damaging review of the subsidies and faces a new battle this autumn to ensure the UK takes on carbon targets for 2030.
Renewable power companies and green campaigners warned that government plans for a further review of subsidies next year with the potential for more subsidy cuts from 2014 could cause investors and financial backers to hold off. They were also concerned that some promising technologies – such as geothermal power – have lost out to more mature forms of energy in the “banding” rates, and new rules affecting small and community-scale renewable energy projects could also prove problematic.
Martin Wright, chairman of the Renewable Energy Association, said: “The government has re-affirmed its commitment to the renewables industry, but we are concerned about the further reviews facing many technologies, which is likely to inhibit investment. Business confidence is essential to realise the vast potential of this industry, in which the UK still lags behind the rest of the world. Companies will not invest without stable government policy delivered in a timely manner. At such a critical time for the economy, this country cannot afford any further political wrangling that puts at risk future investment and job creation.”
Energy from waste was another loser. Charlotte Morton, chief executive of the Anaerobic Digestion and Biogas Association, which represents 300 businesses, said the industry had been expecting a modest subsidy cut, but instead was faced with proposals that would prevent the vast majority of new plants from receiving the subsidy from next April. She said: “Making such a change with little more than six months’ notice will hit projects already in development, as well as the business plans of companies looking to develop anaerobic digestion plants in the next few years. A sudden announcement of a policy which was not part of the original consultation is completely contrary to providing certainty and clarity to businesses, which Decc has said that they want their policies to achieve.”
Geothermal energy, which recent research suggested could provide a fifth of the UK’s energy for the future, has also been left out. Gaynor Hartnell, chief executive of the Renewable Energy Association, said: “We are effectively left with no deep geothermal power industry in the UK, and inadequate incentive to capture methane from landfill sites.”
Caroline Flint, Labour’s shadow energy and climate change secretary, said green industries had lost out to government infighting: “The government’s shambolic review of support for renewable energy has done huge damage to investors’ confidence in the UK as a place to do business. Edward Davey might try to spin this as a victory for the Liberal Democrats, but UK plc has lost out because the Tory-led government has the wrong priorities. Ministers would rather fight each other than fight for new jobs in clean energy and cheaper fuel bills for families and businesses.”
Source: The Guardian