Investments under threat as wind farm subsidy row rumbles on

By KRISTY DORSEY
Published on 26/07/2012 00:00

ONSHORE wind farms yesterday escaped the worst of mooted cuts to subsidies for renewable energy, but industry leaders have warned that further reviews will continue to undermine investment in the sector.

The Department of Energy & Climate Change (Decc) confirmed a 10 per cent cut in payments for onshore wind projects after protracted negotiations in which some had suggested cuts of up to 25 per cent.

However, the new subsidy levels will be subject to a further review later this year, with subsequent changes to take effect in 2014. Euan McVicar, partner in energy at Pinsent Masons, said this meant payment levels were only guaranteed for one year.

“Perhaps in response to those who wanted a greater reduction at this time, there is to be yet another consultation as it applies to onshore wind and possible further review that would be effective from 2014,” McVicar said.

“This obviously undermines the certainty delivered by today’s announcement and there will be further concern about the perception that the government is dithering on big issues.”

Decc subsidies affect only England and Wales, though an announcement on so-called “banding levels” from the Scottish Government later this year is expected to closely mirror those from Decc.

Niall Stuart, chief executive of Scottish Renewables, said any uncertainty would make it difficult for the industry to plan ahead. However, a 30 per cent cut by Decc in payments for energy produced from hydroelectricity is expected to disrupt some major projects.

“Feedback from the industry suggests a number of planned schemes may not go ahead unless the Scottish Government increases the levels of support for hydro in Scotland in its own banding review,” Stuart added.