Blow to UK wind energy industry

The 18 June 2015 marked a gloomy day for the wind energy industry as the Department of Energy & Climate Change (DECC) confirmed that the Renewables Obligation (RO) will close from 1 April 2016 – a year earlier than previously planned.

wind turbine

Income from wind turbines can help make farm enterprises more profitable and resilient in a volatile world

The 18 June 2015 marked a gloomy day for the wind energy industry as the Department of Energy & Climate Change (DECC) confirmed that the Renewables Obligation (RO) will close from 1 April 2016 – a year earlier than previously planned.

The RO has been the fiscal driver for commercial scale onshore wind development for the past 13 years since its introduction in 2002 when it replaced the Non Fossil Fuel Obligation (NFFO). The supporting legislation has contributed to the erection of 5,061 onshore turbines in the UK which in 2014 generated over 18,000 gigawatt hours of electricity for the distribution network. This is the equivalent of 5.6% of the country’s electricity needs and is enough to supply 5.5 million households for a year.

The move follows the Conservative manifesto commitment to end support for new onshore wind projects and whilst not unexpected, represents a controversial early decision for recently appointed Energy Secretary Amber Rudd MP.

In a second blow to the industry, the Department for Communities and Local Government (DCLG) has announced how it intends to ‘give local people the final say’ over onshore wind farm applications. This has involved immediate changes to guidance published in the National Planning Policy Framework (NPPF) and will apply to applications comprising a single turbine upwards.
DCLG suggest local planning authorities should only grant planning permission if the site is in an area identified as suitable for wind energy development as part of a Local or Neighbourhood Plan, and following consultation, the planning impacts identified by affected local communities have been fully addressed and therefore has their backing.

Darren Edwards, a Partner at leading renewable energy consultants Fisher German, said “today’s news is undoubtedly a blow to wind turbine developers in the UK and the implications are widespread – from the big six energy suppliers wanting to develop multi-megawatt schemes for national supply to the small farmer looking to combat rising electricity costs with a single turbine”.

“Whilst Amber Rudd may feel the suggested ‘grace period’ [which is expected to be for 12 months for projects with a planning approval and grid connection] softens the blow of the early closure of the RO (during which time it is anticipated a further 5.2 gigawatt’s of onshore wind capacity could be installed) in reality the financial impact of the move will be profound with Scotland alone estimated to lose out on £3 billion of investment. What is being promoted as a move that will save UK bill payers money could in fact have the exact opposite effect, because onshore wind turbines are the cheapest form of renewable electricity. The Government are keen to support offshore wind farms, but they are typically 50% more expensive.”

“All in all today’s announcement sends a worrying message about the stability of the UK’s energy policy framework and looks likely to discourage inward investment in what has been a positive growth area in recent years”.

Mark Newton, also a Partner in Fisher German, added “it is now going to be much more difficult for farmers and landowners who are financially struggling with low commodity prices across all sectors to diversify their business through wind turbine projects – the most cost-effective renewable energy source. This alternative non-farming income and ability to future proof their business against rising energy costs is proving increasingly critical.”

NFU reaction was no less damning…

The NFU is frustrated that following Government announcements limiting support for onshore wind power, changes to the planning regime (made without consultation) now fail to distinguish between large wind farms and single turbines.

In written ministerial statements, Secretary of State for Communities and Local Government, Greg Clark, said that new planning rules would take effect from June 18; and Secretary of State for Energy and Climate Change, Amber Rudd, proposed constraints on support for onshore wind under the Renewables Obligation and possibly the Feed-in Tariff.

The NFU is concerned about the impact this may have on farmers and growers wishing to diversify their businesses with on-site power generation, the income from which will help make their farm enterprises more profitable and resilient in a volatile world.

NFU President Meurig Raymond said: “We are shocked but not surprised at the extent of this apparent U-turn by Government in low-carbon energy policy. These new planning rules could significantly impact on our members’ ability to invest in wind projects on farm, reduce their input costs and make farm enterprises more sustainable.

“We strongly believe that the Government should have consulted more widely, to ensure that these guidelines were fair and workable before bringing them into force.

“The NFU would like to see a distinction made between ‘farm wind’ and ‘wind farms’, in order to enable our members to continue diversifying and supporting their businesses with locally generated renewable energy.

“It does not appear that local planning authorities have been given the chance to get the necessary local plan policies in place. Furthermore, it may be hard for planners to judge whether, after consultation, ‘all the planning impacts identified by affected local communities have been fully addressed’.”

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