Having already been delayed several times, a statement on new renewables support subsidies – outlining the government’s decision on Renewables Obligation (RO) banding levels – was finally expected before the UK parliament went into recess on July 17. But when the day came, the government said it was delaying the announcement again pending further discussion.
“Any further delay in an announcement could have a devastating impact on investor confidence, job creation and the deployment of clean energy,” said Maria McCaffery, CEO of trade association RenewableUK. “It would be unacceptable if the decision were to be delayed until September, especially as the new banding levels are due to come into force just seven months later, in April 2013.”
She stressed: “It is imperative that investment and job creation are not harmed in one of our key growth sectors. The industry is demanding clarity at the earliest possible opportunity as a matter of urgency”.
Under the proposals, support for onshore wind could be cut by at least 10% while support for offshore wind would be reduced by 5% in April 2015 and a further 5% in April 2016. Support for the UK’s nascent wave and tidal energy sector would increase to two and a half times the current level.
“The Government continually talks about the UK manufacturing its way out of recession, however it is failing to take advantage of one of the key sectors that has the skills and capabilities to drive that growth,” commented Alex Dawson, Chairman of Energi Coast, a group which represents businesses in North East England’s renewables supply chain.
“The industry has done everything it can to prepare for the growth in the [offshore wind] market, In North East England alone, hundreds of millions have been invested by companies that have the products, skills and services to meet the requirements of offshore wind. These companies are already winning contracts in the sector and are demonstrating that the supply chain is poised for the next stage of development in the market,” Dawson says. “However, we cannot afford the continued impact government indecision is having on investor and developer confidence otherwise the potential for an industry that can become a key part of both the UK energy mix and the country’s economy will be severely diminished.”
Solar frustration too
The solar industry also expressed concern. Solarcentury, a solar PV installation firm, and Lightsource Renewable Energy, one of the UK’s leading utility-scale solar plant developers, owners and asset operators, issued a joint statement condemning the delay.
The two companies are close to completion on three utility scale solar developments, totalling 11MW. All three developments will be completed before the UK Feed-in Tariff (FIT) for large-scale developments drops from £0.089/kW to £0.071/kWh on August 1, 2012. For the remainder of this financial year, investment into the development of solar plants is likely to switch to the Renewables Obligation which remains at the equivalent of the current 8.9p feed-in tariff rate for the remainder of 2012/13.
“We see a very positive future for further utility scale solar plant developments under the RO through the remainder of 2012/2013, but we are concerned that the [new] delay announced jeopardises future investment,” said Frans van den Heuvel, CEO of Solarcentury. “Solar plants can play a major and cost-effective role in the UKs clean energy future. They are easy to deploy, effective and broadly welcomed by the public and business community alike. As such, Solarcentury is calling for the Government to encourage, not hinder their progress.”
Nick Boyle, CEO of Lightsource Renewable Energy agreed: “We hope solar subsidies like FIT and ROC schemes will continue at sensible levels to assist in keeping solar competitive with other energy sources thus supporting our ultimate goal of reaching grid parity. This would also help to build a stable and profitable industry that will no longer need to rely on government incentives by as early as 2017 if current estimates prove accurate.”