Brian Wilson: Wind down the rhetoric on renewables

WE NEED a proper debate on how and where the renewables sector is heading, writes Brian Wilson

Changes to the rules for onshore wind farms do not signal the end of the road, simply a new direction. Picture: PA
Changes to the rules for onshore wind farms do not signal the end of the road, simply a new direction. Picture: PA

The announcement by Amber Rudd, Secretary of State for Energy and Climate Change, does not mean the end for onshore wind farms. However, nobody should under-estimate its significance or wider ramifications.

Ms Rudd had a clear manifesto commitment to honour in respect of subsidy to onshore wind which had little to do with energy-related considerations. But she must also consider the message transmitted to investors in the energy sector as a whole, which is now in equally urgent need of refining.

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Energy is a long-term investment dependent on some degree of consistency in the approach from government even when its political complexion changes. It will be more difficult to offer reassurance on that score if it appears that political whim can lead to abrupt policy changes without consultation.

Against that background, those who believe that onshore wind has a continuing part to play in the UK’s energy mix and the economic regeneration of Scottish communities need to state their case with clarity and reason. A political stand-off will achieve nothing. A reasonable starting-point might be to acknowledge that Ms Rudd is not without a case.

As the energy minister who introduced it, I can vouch that the Renewables Obligation was never intended to be permanent and open-ended in respect of any single technology. Though electricity was cheap at the time, the implications for consumer bills always featured as a factor to be borne in mind.

The theory was that, as technologies matured, the need for subsidy would decline. It is a matter of judgment, rather than principle, to determine when that point has been reached in respect of any specific technology. But the RO was never intended to create entitlement to a permanent subsidy regime.

It was Ms Rudd’s LibDem predecessor, Ed Davey, who legislated, in the 2012 Energy Act, to scrap the Renewables Obligation with effect from 2017. Instead, the government adopted Contracts for Difference (CfD) which involves developers bidding into finite pots, so that only some projects requiring least subsidy succeed. In other words, the “open-ended” principle was abandoned at that point.

Ms Rudd brought the date forward to 2016 while allowing projects with planning consents and grid connections under the RO system to go ahead as scheduled. To avoid the charge of hyperbole, it would be useful to quantify how many are actually affected by this adjustment and, on that basis, to argue for some leeway.

The Scottish Government always refused to break down its target into different technologies because the “100 per cent renewables” mantra was cover for the fact that nearly all the growth came from onshore wind. It was unrealistic to expect this to go on for ever – paid for, 90 per cent, by consumers in England – but it was only fair for transition to be phased in rather than abruptly imposed.

I find it bitterly disappointing that so little of the manufacturing associated with wind farms in Scotland has been carried out here. That is a major failure on the part of the Scottish Government and does no credit to the biggest developers, Scottish Power and SSE, who have had the benefits of major planning consents and vast subsidies through the Renewables Obligation but failed to reciprocate by creating an industry worthy of the name.

However, that does not mean there are not significant numbers of related jobs and businesses in Scotland and the rest of the UK with entitlement to some protection from sudden changes in policy. Having made her headline announcement, it would be to Ms Rudd’s credit if she now allowed her department room to negotiate on the practical issues arising from implementation.

At First Minister’s Questions, Nicola Sturgeon declared the UK government’s action to be “wrongheaded, perverse and downright outrageous” which doesn’t take us much further. Instead of megaphone diplomacy, I recommend three critical areas of policy which the Scottish Government should engage on with Ms Rudd and her officials.

The first involves CfD itself. There are certainly forces at work which would like to see onshore wind excluded from this system altogether. It should be argued that a blanket exclusion would be an unnecessary step too far. There will still be good projects, with community support, which need subsidy to proceed and it should be possible for them to compete with other established technologies under the CfD system.

Ultimately, it is the size of the pot which will determine how many can happen and thus secure value for the consumer. Excluding them entirely would cross the line between reason and prejudice.Second, there should be protection for community-based schemes which can bring economic benefits directly into places which have little else going for them economically. These are a counterpoise to the major projects funded by companies with deep pockets. Community schemes, to be fundable, need the certainty of ongoing support through Feed In Tariffs, at relatively modest cost.

The third area in which the Scottish Government should set aside rhetoric and concentrate on a specific objective is in relation to the three islands groups – the Western Isles, Shetland and Orkney – each with great renewables potential extending beyond wind power but frustrated by the absence of interconnectors with the mainland.

They should always have been treated as a “third category” – neither onshore nor offshore but, in cost terms, roughly half way between the two. Since Ms Rudd made clear that she intends to continue support for offshore wind, it would be reasonable for her to seize the “islands” nettle and cut through the manouevrings by Ofgem and SSE which have so far frustrated progress.

That agenda would be of more practical benefit to Scotland than simplistic denunciation for political reasons. Indeed, this could be a test of practical politics for both governments and it will be revealing to see how that challenge is addressed. As much as in any policy area, there is an inter-dependence between Scotland and the rest of the UK which discussions should reflect.

If the objective is to secure fair and reasonable outcomes, then opportunities still exist to secure benefits for the Scottish and UK economies. On the other hand, if Scottish politics are now solely about scoring points within the Scotland v England template, the answer blowing in the wind is an unproductive stand-off.