Member Article

Onshore wind subsidies cut by 10%

Onshore wind subsidies are set to be cut by 10%, according to Government reports.

While it is believed that the Treasury had favoured a larger cut of 25%, the Department for Energy and Climate Change believe that it will encourage up to £25 billion in energy generation investment between 2013 and 2017.

The measures will also help households to save between £5-£6 annually on their energy bills.

In 2013-14 £44 of the average household bill will go towards renewables in 2013-2014, increasing to £50 in 2016-17.

However, MPs believe that cutting subsidies too quickly could result in an increase in bills.

The Energy Secretary Ed Davey believes that the projected investment if £20-25 billion could help to create “hundreds of thousands of jobs”.

He told the BBC: “The economy needs that investment and our climate change challenge needs this green energy.”

If gas “proves cheap”, then the Energy Department has said that it will play a major role after 2030, by which time the UK will have substantially reduced its carbon emissions from energy generation.

John Cridland, CBI Director-General, said: “The level of support the Government has agreed for onshore wind will help to encourage investment into our energy sector, creating jobs and supporting growth. Companies must be able to invest with confidence so that we can have secure, affordable and low-carbon electricity in the decades to come.

“The Government is right that gas should play a crucial role in any future energy mix. We have argued that there is no need for a false choice between renewables, nuclear, gas, and carbon capture and storage. It’s clear from the evidence that we need a diverse supply.”

Jennifer Hazlehurst, director in the energy and resources team at Deloitte in the North West, said: “Today’s announcement on future support for renewable power generation shows how hard it is becoming for the Government to balance the cost of electricity and the desire for more renewable energy.

“Some renewable technologies are given limited or no certainty on future support. This is for a number of reasons. The costs for solar energy have changed and support levels need to be recalculated; the costs for onshore wind may also have changed; and biomass may be too popular and therefore cost too much.

“This is after support for some technologies, like solar and offshore wind, has recently been changed from previously announced levels in response to unexpected market events. It seems certain that even where support levels are given, some of these will also be thrown off course by market events and we will continue to see adjustments in the future.

“However, despite changes to the way some technologies are treated, the overall package is still a continued commitment to growth in low-carbon generation. This message will be a comfort to developers as the UK support mechanisms for renewable energy continue to evolve.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .