A renewable energy company warns that it will cancel some onshore wind farms because of subsidy cuts, even as ministers vow to put infrastructure at the heart of economic plans.
“It is almost inevitable there will be projects we will be knocking on the head as a result of this,” said David Handley, chief economist at Renewable Energy Systems, which has 21 UK projects in its pipeline.
Mr Handley said RES had been reviewing its plans since the government first announced a draft subsidy price for onshore wind of £100 per megawatt hour in June.
That will now be cut by £5 to £95 MWh and fall again to £90 MWh from 2017 to 2019, less than the support for new nuclear power, under plans announced before Thursday’s Autumn Statement.
Two other large onshore wind operators also said they could cancel marginal wind farms in less windy areas.
Danny Alexander, chief secretary to the Treasury, insisted that the coalition had not bowed to pressure from Conservative MPs opposed to wind farms.
Mr Alexander said the overall “envelope” for renewable energy would remain the same, given an increase in support for offshore wind power at £155 MWh in 2015-16 and £140 in 2018-19.
The announcement amounts to a big bet on the future of offshore wind, one of the most expensive forms of renewable energy, and means developers have been guaranteed nearly three times today’s wholesale power price until the next decade.
The British coastline currently generates 6,000MW – equal to about four gas-fired power plants.
But over the next 15 years, the industry plans to put in another 36,000MW, which would amount to nearly half the UK’s available generating capacity going into this winter – dwarfing onshore wind.
Brent Cheshire, who chairs Dong Energy UK, one of the UK’s biggest offshore wind developers, said: “This is a concrete step in the right direction”.
David Cameron admitted that the slow delivery of infrastructure in the UK had been “frustrating” for senior ministers – even as the Treasury unveiled a wish list of £375bn of key schemes for coming decades.
The prime minister, speaking in China, said projects were often delayed by a necessary “democratic accountability” in the planning system.
Mr Alexander struck a buoyant tone as he unveiled an updated National Infrastructure Plan , saying the coalition had overseen hundreds of new projects.
But the CBI employers’ group said the updated plan still felt like a “very long and hopeful Christmas list”.
Many in industry are concerned about slow progress in nuclear power, garden cities, gas-fired power stations, the London “super-sewer” and carbon capture and storage. The new plan admits that only half the coalition’s “Top 40” priority projects are either being built or in “ongoing work programmes”.
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