Jul 25, 2012 - Subsidies for onshore wind in the UK will be cut by 10%, the UK Department of Energy and Climate Change (DECC) said today as it unveiled revised bandings under the Renewables Obligation (RO) for the 2013-2017 period.
The RO is the main mechanism at the moment through which the UK government supports large-scale renewable electricity installations.
The 10% cut in onshore wind support to 0.9 Renewable Obligation Certificates (ROCs) per MWh is the same as in the consultation proposals. The decision comes after reports that the Treasury had sought a deeper cut of up to 25%. The new rates, however, are guaranteed until March 2014 and could be adjusted after then if generation costs changed significantly, according to the announcement. A call for evidence on onshore wind industry costs is to be issued in the autumn, with a report due in early 2013.
The RO revisions also include more than doubling the support for certain marine energy technologies to 5 ROCs from 2 ROCs per MWh, subject to a limit of 30 MW per facility. No immediate cut to the support for large-scale solar is envisaged, but a further consultation will be held this year on reducing subsidies in light of the steep cost falls. Further, a new band will be introduced for the conversion of existing coal plants to biomass fuels, which DECC says will boost renewable energy generation at a lower cost to consumers. Subsidies for offshore wind will be set at 2 ROCs per MWh in 2014/15, falling to 1.9 ROCs and 1.8 ROCs in 2015/16 and 2016/17, respectively.
DECC said the proposals gave the industry certainty to make near-term investment decisions. It estimates that they will deliver 11 TWh more renewable energy in 2016/17 compared with current bandings and encourage between GBP 20 billion (USD 31bn/EUR 26bn) and GBP 25 billion of new investment in the 2013-2017 period. Edward Davey, Secretary of State for Energy and Climate Change, also said that the changes would save GBP 6 off consumer household energy bills next year and GBP 5 in the following year.
The revised support levels will become effective on April 1, 2013, subject to Parliamentary and State Aid approval.