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UK renewable energy industry threatens legal action over subsidy cuts

UK renewable energy trade body RenewableUK has said it will launch legal challenges if the government cuts the existing subsidy scheme for onshore wind power. 05 Jun 2015

The Department of Energy and Climate Change plans to close the Renewable Obligation (RO) subsidy scheme a year earlier than planned, sources have told The Guardian.

However, Marcus Trinick, a lawyer for RenewableUK, called for secretary of state for energy Amber Rudd to reconsider the action or face legal challenges.

Writing in a separate Guardian article this week, Trinick called on Rudd to consult with the trade body before acting and warning that proposed measures might represent state aid discrimination.

Maf Smith, deputy chief executive of RenewableUK, told the Guardian that the industry would fight the move, saying it appears to contradict the government's pledge that cuts would only be to new, not existing, subsidies.

“The industry will fight against any attempts to bring in drastic and unfair changes utilising the full range of options open, including legal means if appropriate,” he said.

The RO scheme is due to be replaced next year by the contracts for difference (CfD) mechanism, one of the most significant parts of the UK government's electricity market reform (EMR) programme, through which it aims to incentivise up to £110bn in energy investment over the next decade.

CfDs provide guaranteed payments to operators of approved renewable generation technology while enabling the system operator to claw back money when market prices are high.

In February, 27 projects were awarded CfDs worth over £315 million after a competitive bidding round, during which developers of projects using more established electricity generation technologies were invited to bid for the lowest guaranteed price per megawatt hour (MWh) supplied to the grid that they were able to accept. According to the Department of Energy and Climate Change (DECC), the low 'strike prices' obtained from this process meant that the government was able to support an additional 55MW of generating capacity.