Onshore wind: reasons to be cheerful

By Robert Ede May 29, 2015 10:01 am

For a party that gave little consideration to energy and environment policy during the recent election campaign, to many the Conservative Party’s stance on onshore wind represents a rare point of clarity.

In December last year, Prime Minister David Cameron indicated that the public were “fed up” with wind turbines in the countryside, arguing that “enough is enough”. A commitment to “halt the spread of subsidised onshore wind farms” duly followed in the Party’s manifesto.

Following the election outcome, the fears of the renewables industry appeared to have been confirmed when new Energy Secretary Amber Rudd said that the Government would fast track proposals early-on in the Parliament, with a target implementation date of May 2016.

The debate seemed settled. Onshore wind, despite being highly cost-effective and commanding good public support, was to be shelved.

But the draft Energy Bill presented in the Queen’s Speech presents an altogether more clouded picture.

In sum, the Government has put forward plans to legislate on two key aspects of onshore wind development: planning consent and subsidies. The new Bill would require for all future onshore wind developments to be determined by the local planning authorities, with the commitment to “end new subsidy” to be delivered separately in due course.  It admittedly sounds alarming, but behind the rhetoric the changes are much less significant that you might expect. Indeed, I would argue there are several reasons to be cheerful. Here’s why:

  1. The changes to planning would (probably) only apply in England.

Planning decisions in Northern Ireland and Scotland are devolved to their regional assemblies, and would therefore not be affected by this change. This is significant as Scotland contains the bulk of the UK’s large-scale wind farms, with another 50 developments greater than 50MW current passing through the Scottish planning process.

Furthermore, there is an indication that the Welsh Assembly will join Holyrood in gaining planning autonomy, with new proposals contained in the Queen’s Speech pledging to devolve decision making power for any onshore or offshore energy project up to 350 MW.

  1. Very few wind farms would be affected.

According to industry figures, there are only three operational large scale wind farms in England greater than 50MW. In total these generate 179 MW – approximately five per cent of the capacity of all onshore wind turbines in the country – both big and small – put together.

According to the National Infrastructure Planning website, there are only two planned sites that exceed the 50MW threshold would therefore likely be affected – a proposed expansion to Keadby wind farm and Vattenfall’s Nocton Fen scheme.

So whilst the announcement is not encouraging for the industry, it is important to emphasise that its impact will be very limited.

  1. The Government rhetoric is being increasingly toned down

Following the Queen’s Speech, the Department for Energy and Climate Change (DECC) released a blog post by Amber Rudd – the first of her tenure as Secretary of State. The language chosen was deliberately neutral in tone, and Rudd emphasised that the changes were principally seeking to democratise the process of allocating wind farms, rather than to necessarily restrict their growth:

“It’s right that local people should have the power to decide whether they want a wind farm in their area, so we’re devolving powers out of Whitehall. My existing consenting powers in relation to onshore wind will transfer to local planning authorities, making decisions on energy more democratic and giving our communities a direct say on these planning decisions” said Rudd.

The implication for the onshore wind industry is that, provided it can find a way of demonstrating genuine local public support, projects will continue to go ahead. Of course placing the onus on the developer and not with the Secretary of State has both positives and drawbacks. But it should ensure that a Minister would no longer have the power to deliberately block the building of onshore wind under ideological grounds, as was often the case during the turbulent tenure of John Hayes MP as Minister of State for Energy.

  1. DECC have not made up their mind on what constitutes a subsidy.

DECC has outlined that “the commitment to end new subsidy for onshore wind farms will be delivered separately, and DECC will be announcing measures to deliver this soon”. But what constitutes a subsidy? The loose wording leaves significant ambiguity over what these alterations would look like. It could be considered that the current Contracts for Difference scheme (CfD) does not constitute a subsidy because developers are required to pay back the difference if the wholesale price of energy exceeds the agreed support price. This was the primary justification for the strike price determined for the building of Hinkley Point C.

Compounding these difficulties is the legal minefield created by privileging one technology over another. If the Government does look to intervene in the auction process and prevent onshore wind from gaining future contracts, there is the real threat of an EU challenge due to competition law.

  1. Funding pressures may encourage a Government rethink

If right-leaning think tank Policy Exchange is to be believed, spending through the Levy Control Framework (effectively the cap on spending imposed by the Treasury) is spiralling out of control and will exceed its £7.6bn budget much sooner than anticipated. This is due to a number of factors; the early-allocation of CfDs without competition, the unprecedented success of the Feed-in-Tariff, and the over allocation of contracts of cost-high but generation-low offshore wind among others.

The salient point is this: as we approach a pinch-point in financing later this year, as we approach round two of the CfD auction, the Government will be forced to consider how to get as much capacity as possible from its remaining pots of funding. Amid this naval-gazing, it would seem perverse to completely rule out one of the cheapest technology types. Indeed, it is with some irony that acute financial pressures may end up forcing a U-turn in the Tory stance on onshore wind, which has been oft dismissed by Conservative commentators due to its apparently drain-like qualities on the public purse.

Little can be certain as we enter a critical period for onshore wind. With much to be finalised, proactive engagement in the next few months will be crucial. But watch this space – there is plenty of life left in onshore wind.

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