Onshore Wind Subsidies — House of Commons, 2015-06-22
Topic: Energy
Amber Rudd (Conservative, Centre-right): With your permission, Mr Speaker, I would like to make a statement on ending new subsidies for onshore wind The Government are committed to meeting objectives on cutting carbon emissions and to continuing to make progress towards the UK’s 2020 renewable energy targets. The renewable electricity programme aims to deliver at least 30% of the UK’s electricity demand from renewables by 2020. We are on course to achieve that objective. Renewables already make up almost 20% of our electricity generation and there is a strong pipeline to deliver the rest As we decarbonise, it is imperative that we manage the costs to consumers. Although renewable energy costs have been coming down, subsidies still form part of people’s energy bills, and as the share of renewables in the mix grows, the impact gets proportionately larger. One of the Government’s priorities is to bring about the transition to low-carbon generation as cost-effectively and securely as possible The levy control framework, covering the period up to 2020-21, is one of the tools to help to achieve that. It limits the impact of support for low-carbon electricity on consumer bills. We have a responsibility to manage support schemes efficiently within the levy control framework to ensure that we maintain public support for the action we are taking to bring down carbon emissions and to combat climate change Government support is designed to help technologies to stand on their own two feet, not to encourage a permanent reliance on subsidies. We must continue to take tough judgments about what new projects get subsidies. Onshore wind has deployed successfully to date and is an important part of our energy mix In 2014, onshore wind made up around 5% of electricity generation, supported by around £800 million of subsidies. At the end of April 2015, there were 490 operational onshore wind farms in the UK, comprising 4,751 turbines in total. Those wind farms have an installed capacity of 8.3 GW—enough to power the equivalent of over 4.5 million homes The electricity market reform delivery plan projects that we require between 11 and 13 GW of electricity to be provided by onshore wind by 2020 to meet our 2020 renewable electricity generation objective, while remaining within the limits of what is affordable. We now have enough onshore wind in the pipeline, including projects that have planning permission, to meet that requirement comfortably Without action, we are very likely to deploy beyond that range. We could end up with more onshore wind projects than we can afford, which would lead to either higher bills for consumers or other renewable technologies, such as offshore wind, losing out on support. We need to continue investing in less mature technologies so that they realise their promise, just as onshore wind has done. It is therefore appropriate further to curtail subsidised deployment of onshore wind, balancing the interests of onshore developers with those of bill payers. This Government were elected with a commitment to end new subsidies for onshore wind and to change the law so that local people have the final say on onshore wind applications. Colleagues, particularly my hon. Friend the Member for Daventry (Chris Heaton-Harris) and, additionally, my hon. Friends the Members for Montgomeryshire (Glyn Davies) and for Selby and Ainsty (Nigel Adams), and my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), have led the way in calling for this. Six weeks into this Government, we are acting on that commitment. Alongside proposals outlined within the new energy Bill to devolve decision making for new onshore wind farms out of Whitehall, my right hon. Friend the Secretary of State for Communities and Local Government has set out further considerations to be applied to proposed wind energy development in England so that local people have the final say on onshore wind farm applications I set out to Parliament on 18 June proposals to end new subsidies for onshore wind, specifically in relation to the renewables obligation, which will be closed to new onshore wind from 1 April 2016—a year earlier than planned. My Department’s analysis indicates that, after taking account of an early closure, onshore wind deployment under the RO will be in the region of 11.6 GW. With that capacity, and the capacity of onshore wind projects that have received support through the new contracts for difference, we expect about 12.3 GW of onshore wind to be operating in the UK by 2020, supported by the levy control framework, which will provide about 10% of electricity generation. That puts us above the middle of the deployment range set out in the EMR delivery plan, which provides our best estimates of what we will need to meet the planned contribution from renewable electricity for our 2020 targets I have proposed a grace period that will continue to give access to support under the RO to projects that, as of 18 June 2015, had planning consent, a grid connection and acceptance and evidence of land rights for the sites on which their projects will be built. We estimate that about 7.1 GW of the onshore wind capacity that has been proposed across the UK will not be eligible for the grace period and is therefore unlikely to go ahead as a result of the announcement on 18 June. That equates to about 250 projects, totalling about 2,500 turbines, that are unlikely to be built Therefore, by closing the RO to onshore wind early, we are ensuring that we meet our renewable electricity objectives, while managing the impact on consumer bills and ensuring that other renewables technologies continue to develop and reduce their costs. Consumer bills will not rise because of this change. Indeed, the onshore wind projects that are unlikely to go ahead could have cost hundreds of millions of pounds. I believe that we have drawn the line in the right place In advance of this announcement, I and other Ministers and officials discussed the proposals with the devolved Administrations in Wales, Northern Ireland and Scotland. We want to hear the further views of the devolved Administrations, as well as of industry and other stakeholders. This is just the beginning of the process, and we will continue to consult them as we move towards implementation The changes to the renewables obligation do not affect remote island wind proposals, which would not have been in a position to receive RO subsidy even under the previous timelines. I will say more about how future CfD projects will be treated in due course. However, I am conscious that 68% of the onshore wind pipeline relates to projects in Scotland. I will continue to consult colleagues in the Scottish Government. Indeed, I am meeting the Scottish Minister for Business, Energy and Tourism, Fergus Ewing, on Wednesday. Because we are implementing these changes through primary legislation, they will be subject to full parliamentary scrutiny, including by Members representing Scottish constituencies On contracts for difference, we have the tools available to implement our manifesto commitments on onshore wind and will set out how we will do so when we announce our plans for further CfD allocations. I will shortly be considering options for future support for community onshore wind projects that might represent one or two turbines through the feed-in tariff, as part of the review that my Department is conducting this year. I do not wish to stand in the way of local communities coming together to generate low-carbon electricity in a manner that is acceptable to and supported by them, including through small-scale wind capacity. However, that action must be affordable as well as acceptable Clean energy does not begin and end with onshore wind. Onshore wind is an important part of our current and future low-carbon energy mix, but we are reaching the limits of what is affordable and what the public are prepared to accept. We are committed to meeting our decarbonisation objectives. The changes that I have outlined to Parliament will not change that. I look forward to having meaningful discussions with industry, other stakeholders and colleagues in the House and in Scotland, Wales and Northern Ireland on how we will move forward.