Government plans to curtail onshore wind farm subsidies will raise energy bills, “massively damage” investor confidence and could see hundreds of millions of pounds of investments written off, energy giant ScottishPower has claimed.
Keith Anderson, its chief corporate officer, launched the outspoken attack after the Telegraph revealed that Amber Rudd, the energy secretary, was considering shutting the ‘Renewables Obligation’ (RO) subsidy scheme early.
The plans, expected to be unveiled within days, are designed to implement the Conservatives’ manifesto pledge to end any new public subsidy for onshore wind farms.
The wind industry on Sunday stepped up last-ditch lobbying to try to save the subsidies, insisting onshore wind was the cheapest green energy option and popular with the public.
Under current policy, any big onshore wind turbines built by March 2017 would automatically receive subsidies under the RO.
When the RO shuts, the only subsidies for onshore wind will be through new contracts that are less generous and are strictly rationed by ministers who will decide how much cash – if any – is available.
Mr Anderson said the plans for early RO closure were of “huge concern” and he was also worried DECC would “kill the budget” for the new contracts. “Then you have got a whole lot of people writing off literally millions of pounds of investment,” he said.
“Onshore wind is clearly still the most cost effective large scale way of deploying renewable technology in the UK. Economically, you would therefore question, why in God’s name would you want to bring that to a premature halt?
“Our calculations are that if you prematurely bring onshore wind to a halt you will end up costing consumers £2bn to £3bn. You will end up having to deploy offshore wind or other more expensive technologies,” he said.
Shutting the RO scheme early would also deter investment in offshore wind farms – which the Conservatives say they still support, he claimed, threatening that ScottishPower might not proceed with development work on its next offshore project.
“We have been spending money in good faith under the rules of the RO,” he said.
“If you’re watching what you thought were agreed mechanisms being changed and taken away, that massively damages your confidence as to what you invest. If you take our position, where we will lose millions of pounds if these mechanisms are shuttered early, why would you carry on investing in offshore which is even more money and even more risky and even longer term?”
The exact impact of closing the RO early will hinge on whether ministers offer a ‘grace period’ enabling projects that have already got planning permission to still get built.
The Conservatives have so far suggested they do still want to see those projects proceed.
A DECC spokesman said: “Looking at what has already had planning permission, there is enough onshore wind to contribute what’s needed.”
Almost 3,000 onshore wind turbines have already been granted planning permission and many would have been expecting to secure subsidies under the RO.
A further 3,000 new turbines are in the planning system, some of which would have hoped to get permission and rush to get built in time to qualify for the RO scheme.
Ian Marchant, chairman of wind developer Infinis Energy, said: “The Government’s alleged plans to close down the Renewable Obligation-regime early for onshore wind beggar belief. It puts the views of a minority of Conservative backbenchers before the interests of millions of bill payers in this country.
“This initiative would affect British businesses who have put hundreds of millions of pounds at risk in planning and procuring renewable power generation infrastructure under the RO. If the RO is terminated early without reasonable grace periods in place, not a single energy or large scale infrastructure project in the UK will be safe going forward.”
DECC declined to confirm its precise proposals or comment on the criticism.
However a spokesman earlier said: “We will shortly be publishing our plans to reform the Renewables Obligation and Feed in Tariff scheme to implement this commitment. With the cost of supplying onshore wind falling, government subsidy is no longer appropriate.”