U.K. Cuts Renewables Support, Backs Nuclear

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K. government has announced cuts to its support schemes for renewable energy just weeks after announcing the end to financial aid for onshore windfarms.

The changes will see the removal of the guaranteed level of subsidy under the Renewables Obligation (RO) scheme a year early for solar projects of 5-megawatts (MW) or under. Biomass conversions and co-firing projects at coal-fired power plants also will lose their guaranteed level of subsidy under the RO scheme. The government claimed that the changes will lead to the end of the process known as "grandfathering" for conventional power plants and offset future allocations that will save about $780 million per annum in 2020-21.

The government also plans to change how renewable projects qualify for financial subsidies--most of which are funded by a levy on people's energy bills.

The proposed changes have drawn fire from the renewable energy sector, but the government claimed they are necessary to stop consumer's energy bills spiraling out of control.

Amber Rudd, the new energy and climate change secretary, said: "My priorities are clear. We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way. Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies. We're taking action to protect consumers, whilst protecting existing investment."

Talking to the BBC, she added: "We can't have a situation where industry has a blank cheque and that cheque is paid for by people's bills."

She also indicated that a final decision on the country's first new nuclear power project in more than 20 years is almost there: "We hope the decision [on Hinkley Point C] will be made later on this year. We are very committed as a government to making sure that we build new nuclear and Hinkley Point will be the first of those. Old nuclear is coming off and I think we need as much investment as we can procure in order to support new nuclear. We have to have secure base-load, so you should not be surprised that we are prepared to pay more for that in order to ensure nuclear is part of the mix. The requirement for nuclear is absolute".

Gordon Edge director of policy at RenewableUK, the U.K.'s renewable energy association, said: "Despite the laudable ambitions expressed by the Energy Secretary in her speech today, the current trajectory of current government policy on renewables is not an encouraging one, following their announcements on ending support for onshore wind and solar, as well as scrapping the Green Deal and the Zero Carbon Homes objective, and making punitive changes to the Climate Change Levy. It's like saying you want to win the Tour de France on a bike without wheels. That basic mismatch between rhetoric and action will make investors very nervous. Until this is sorted out, the essential ramp-up of investment in the low carbon economy will flat-line".

At the start of July, Industrial Info reported that the government had decided to end all financial support for new onshore windfarms by April next year. For additional information, see July 6, 2015, article - U.K. Confirms End for Onshore Wind Subsidies.

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