Offshore wind gains in UK shake-up of renewables subsidies
Subsidies for onshore wind and solar power in the UK are to be cut in preference for larger subsidies for offshore power generation in a shake-up of the subsidy system for renewable energy. Details contained in the National Infrastructure Plan confirm the guaranteed price for onshore wind – which has been hugely controversial in rural England – is to be lower than the draft prices set out in a consultation in the summer.
The new prices govern the “contracts for difference” which will subsidise renewable energy in the next parliament, replacing the current system of “renewable obligation” certificates (ROCs).
Onshore wind will be lower than set out in June by £5 to £95 per megawatt hour (MWh), falling again to £90 from 2017 to 2019.
But Danny Alexander, chief secretary to the Treasury, insisted that the coalition had not bowed to pressure from Tory MPs who have campaigned vociferously against wind farms in the countryside.
“It is not about that,” he told a press conference in Whitehall. “It is about getting the best value for money for the consumer as well as ensuring that offshore wind, which has such important potential . . . has the commitment and support that it needs.”
The new price for onshore wind is less than EDF, the French power giant, will receive for four decades for its new nuclear power station at Hinkley Point in Somerset, where it has agreed a strike price of £92.50.
For large solar plants, the price will be cut by £5 to £120 per MWh for 2015-16 and to £115 for 2016-17 and will continue to fall in later years.
Mr Alexander said that the overall “envelope” for renewable energy would remain the same after the changes, but would become more generous for offshore wind.
The price for offshore wind will remain the same for 2015-16 at £155 a MWh. In the draft proposals announced in June, it was due to be cut to £135 in 2018-19 but will instead be raised by £5 to £140.
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.
That should help cement the UK’s position as the largest offshore wind power, with more generating capacity than the rest of the world combined.
The gigantic turbines planted around the British coastline over the past 10 years have a capacity of nearly 4 gigawatts – equal to around four gas-fired power plants. But over the next 15 years, the industry is planning to put in another 36GW, which would amount to nearly half the UK’s available generating capacity going into this winter.
That would dwarf onshore wind, which today has nearly 7GW of operating farms with around another 5GW in the pipeline.
It is about getting the best value for money for the consumer as well as ensuring that offshore wind, which has such important potential . . . has the commitment and support that it needs– Danny Alexander, chief secretary to the Treasury
Offshore wind may be more attractive politically for MPs besieged by constituent complaints about land-based turbines blighting pretty country landscapes, but it is not going to be cheap.
The industry has long recognised it needs to bring down offshore costs as quickly as possible and Wednesday’s announcement should make it easier to do so, according to Maf Smith, deputy chief executive of the RenewableUK wind power industry association.
“Our concern is that some onshore projects may not go ahead, but we will need to wait and see,” he said.
“If this cut has been made for political reasons rather than economic ones that would be a worry,” he added. “All politicians need to understand that uncertainty spooks investors and it is the consumer who bears that cost. Voters support the development of on and offshore wind, so we now need a period of calm and consistency from government.”
Brent Cheshire, chair of DONG Energy UK, one of the UK’s biggest offshore wind developers, welcomed the announcement.
“This is a concrete step in the right direction from the government towards fulfilling the next phase of offshore wind development in the UK,” he said.
The new strike prices are part of a new subsidy regime, legislated in the current energy bill, which should provide future certainly for investors by guaranteeing to pay the difference between the variable wholesale power price and the fixed strike price.
The UK has pledged to generate 15 per cent of its energy needs via renewable energy by the end of the decade. Government data show that in 2011 and 2012 an average of 3.94 per cent of energy consumption came from renewables, just below the 4.04 per cent target.
In November the plans suffered a setback when German company RWE scrapped plans to build a £4bn offshore wind farm in the Bristol Channel. The company said the costs of overcoming the project’s technical challenges were “prohibitive” in current market conditions.
Fonte: ft.com
