Coalition facing back-bench revolt over wind farm subsidies

June 29, 2013 by  
Filed under Green Energy News

The subsidy, which is paid for through household bills, was introduced by the
Labour government to encourage investment in renewable energy.

But a huge growth in wind farms has seen the subsidy rise to about £1.2 
billion this year, according to the Renewable Energy Foundation, a think
tank critical of the subsidies. It is expected to rise to £6 billion by 2020
to meet targets for providing 30 per cent of electricity through green
energy.

Tories had been keen for a further cut in the subsidy, which has seen a swathe
of wind farms built across the UK. But Ed Davey, the Liberal Democrat Energy
Secretary, has succeeded in reversing last year’s reduction.

In March, John Hayes, the energy minister, was shifted out of the Department
of Energy and Climate Change after repeatedly clashing with Mr Davey. Mr
Hayes had told The Sunday Telegraph that he would put “coal” back into the
Coalition, only to be replaced, by Michael Fallon. Last night, Chris
Heaton-Harris, the Conservative MP who has led the campaign against
wind-farm subsidies, said: “If this analysis of the figures is correct, it
will inevitably lead to back-bench anger. This is a major Coalition pinch
point. It is not going to go away unless the subsidy comes down. If this is
right then we will have to get the subsidy reduced again.”

Mr Heaton-Harris pointed out that in Spain the subsidy had been scrapped
entirely at the start of the year under new austerity measures, and urged
British ministers to look at it again. Mr Heaton-Harris had organised a
letter signed by 100 Conservative MPs, which had led to the cut in subsidy
last year.

Dr John Constable, director of the Renewable Energy Foundation, said: “Far
from addressing oversubsidy to renewables to protect the consumer, as was
expected and necessary, it seems that the Liberal Democrat Secretary of
State for Energy, Mr Davey, has actually decided to increase subsidies to
the Government’s principal pets, onshore and offshore wind.”

Dr Constable added: “The draft strike prices just published suggest that
Government has foolishly decided to continue to shelter the renewables
industry from the real world competition necessary to make the sector
fundamentally viable. That’s good for speculative investors, but very bad
for consumers and for the long-term development of renewables.”

RenewableUK said that the industry was awaiting a further announcement, due
next month, on energy market reform, which the industry says will determine
whether large-scale wind projects get built offshore.

The sector has promised a massive jobs boom if the Government gives guarantees
on electricity prices to 2030 and beyond.

RenewableUK said that the level of subsidies meant it was “challenging” for
the wind industry to make a profit.

“The most important ingredient remains investor confidence and that will take
time to land,” said Maria McCaffery, chief executive of RenewableUK.

“The secret is consistent long-term support and investors seeing that
government is behind renewables and low carbon generation for the long term.”

A Conservative source in the department confirmed the new strike prices,
saying: “We did a review of the evidence, and it didn’t support cutting
[subsidies] any further.

“Michael Fallon got the agreement that I don’t think John Hayes would have
got, given the relationship he had with Ed Davey by the end.”

The source said it was disappointing that subsidies were still having to be
given but added that recently announced changes to planning guidance meant
that local communities would have effective powers to stop the development
of new onshore wind farms.

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