More for offshore wind, less for onshore and solar: what the new subsidies announcement says about the governments renewable energy plans
The government intends to cut subsidies for onshore wind and solar power, while slightly increasing financial support for offshore wind, it announced today. It believes the changes won’t hurt its plans to expand renewables – and the industry appears to agree.
Just four per cent of the UK’s energy came from renewable sources last year. The government’s hopes to ramp that up to 15 per cent by the end of the decade, as specified by a European Union target.
The government is providing subsidies to make sure this happens. But as industries like onshore and offshore wind, solar power and biomass develop, they become more competitive with fossil fuels – and so need less support. Today’s changes are intended to make the government’s plans less costly, while hitting the same target.
Onshore wind
The government has announced a small cut to subsidies for onshore wind, which will kick in in 2015. Subsidies for onshore wind will then decrease on a year by year basis towards the end of the decade:
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Graph created by Carbon Brief. It compares the old subsidies for onshore wind which were established in July of this year, with the new subsidies announced today.
In order to hit its EU target, the government believes it needs about 13 gigawatts (GW) of onshore wind about 2020. But the country already has nearly 7GW of onshore wind in place, and 6GW consented or under construction. The industry is developing fast.
Despite media speculation that the government could be caving in to lobbying by anti-renewable Tories, the renewable energy industry seems relatively sanguine about the changes. While trade industry group Renewable-UK says the reduction in subsidy is ” unwelcome“, a spokesperson tells Carbon Brief the change is only likely to adversely affect fairly small-scale community based projects on the margins of viability.
Offshore wind
Offshore wind is the winner from today’s announcement. From 2018, the government has slightly increased the support it plans to offer the technology – from £135 per megawatt hour of electricity to £140:
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Graph created by Carbon Brief. It compares the old subsidies for offshore wind which were established in July of this year, with the new subsidies announced today.
This may not sound like a major change, but it could make a significant difference to the number of projects that get built. The renewable energy industry has been lobbying for an increase in offshore wind subsidies, and has welcomed the change.
Professor Paul Ekins at UCL tells Carbon Brief the change sounds like a “decent uplift” that could make a difference to investors who are wobbling about whether to bank on the sector.
Despite the increase in funding, the government is playing down offshore wind’s prospects for expansion. The Department for Energy and Climate Change has previously argued it may be possible for the UK to build 18GW of offshore wind by 2020. It appears to have downgraded that vision, today arguing that 10GW is “ achievable” – although it says more may be possible.
Solar farms
Solar power has been an unexpected success story over the last few years. The government boasts the cost of solar panels has fallen by half in just two years. Duly, expansion plans for large-scale solar farms around the country have started to cause concern amongst local communities.
It’s no surprise then that solar subsidies have also been cut:
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Graph created by Carbon Brief. It compares the old subsidies for large solar farms, with the new subsidies announced today.
Again, though, the industry doesn’t seem that worried by the cut in support. The Renewable Energy Association tells Carbon Brief that it “isn’t ideal”. But as the costs of the technology continues to fall, it’s confident that the industry can continue to expand in line with the government’s plans.
The government says it plans to more than double the UK’s solar capacity – reaching somewhere between 7GW and 20GW by 2020. It’s intending to publish a dedicated solar strategy early next year.
Good news?
Cuts to renewable subsidies are often spun as bad news stories. But Professor Ekins tells Carbon Brief he disagrees – because the changes show that the price of renewable power is falling, and the benefits increasing. As the technologies develop, they are becoming more competitive, and need less support from government.
And while the renewable energy industry’s response is somewhat more grudging, it appears to agree. The government may be cutting some subsidies to renewables, but it doesn’t look like that’s going to stop the industry growing.