Out-Law News 1 min. read
23 Jun 2015, 5:20 pm
In a statement to parliament Amber Rudd said that the UK was "reaching the limits of what is affordable" under the Renewables Obligation (RO), which is to be closed to new onshore wind projects one year earlier than planned. Around 7.1GW of onshore wind generating capacity was in the early stages of development when the changes were announced and will not be eligible for 'grace periods' announced by the government, Rudd said.
The energy secretary said that the change "draws the line in the right place".
"By closing the RO to onshore wind early, we are ensuring that we meet our renewable electricity objectives, while managing the impact on consumer bills and ensuring that other renewables technologies continue to develop and reduce their costs," she said.
"Consumer bills will not rise because of this change. Indeed, those onshore wind projects unlikely now to go ahead would have cost hundreds of millions of pounds," she said.
Further announcements setting out the extent to which onshore wind would be entitled to subsidies under the new contracts for difference (CfD) mechanism would follow shortly, she said.
As announced last week, the government is ending the RO subsidy programme for new onshore wind in England, Wales and Scotland one year before the scheme closes to all projects and is replaced by CfDs. The RO is due to be phased out entirely by 31 March 2017 and replaced by CfDs, under which more established technologies are expected to compete on price and the system operator is able to claw back subsidies when market prices are high.
Developers that had already been granted planning consent, a grid connection offer and acceptance, and that could provide evidence of land rights for the site on which their projects would be built as of 18 June 2015 may still be able to receive support under the RO, according to the original announcement. Projects that successfully meet the grace period criteria would then have until 31 March 2017 to begin generating electricity, according to industry news service Inspiratia.
According to government analysis, 11.6GW of onshore wind including planned projects eligible for grace periods will ultimately have been supported by the RO, Rudd said in her statement to parliament. Around 12.3GW of onshore wind is anticipated to be operational in the UK by 2020 once projects that have received CfDs are taken into account, meaning that the UK will be well within the 11-13GW onshore wind target needed to meet its 2020 renewable electricity generation objective as set out in the Electricity Market Reform (EMR) delivery plan, Rudd said.
Onshore wind made up around 5% of electricity generated in the UK in 2014, supported by around £800 million in subsidies, according to government figures.