On-shore wind farms in England & Wales face subsidy cuts

Proposed Reforms to Renewable Subsidies favour off-shore wind energy at the expense of other renewable sectors, including on-shore wind farms The long-awaited changes to renewable energy subsidies in England and Wales were announced by the Government today. New support levels are proposed for a raft of clean energy technologies, and the proposals set out how subsidies will be reduced over time. Proposals for Scotland will be announced shortly. While off-shore wind energy developers and operators will benefit significantly from the proposed changes to the Renewables Obligation Certificate (ROC) scheme, other sectors such as geothermal, biomass and onshore wind farms are faced with reforms.

Saffery Champness notes that the changes, which will apply from 2013 through to 2014, underline the government's commitment to driving investment in the UK's renewable energy industry. Commenting on the announcement, Shirley Mathieson, renewable energy partner at Saffery Champness, says: “The review proposes a significant increase in the number of tradeable ROCs awarded to wave and tidal energy projects”.

“However, other renewable energy sectors face more controversial cuts that are likely to force developers to reconsider future projects. Of note is that the bulk of the subsidies on offer to waste energy projects are being reduced, while only relatively minor changes are being proposed for biomass power plants despite calls from the industry for an increase in support.

Jamie Younger of Saffery Champness Renewables Energy Group, says: “Of immediate note to landowners is the proposed 10% cut in onshore wind and a 50% cut in Hydro ROC support. There will undoubtedly be a reaction from the industry. However, the onshore wind reduction is not as bad as had been feared in some quarters and should mean that the vast majority of projects in the pipeline are still viable.  However, the implications for Feed in Tariff projects are not yet known. 

“Most ROC schemes are only available to landowners via a lease structure although in some cases, Saffery Champness has been able to negotiate more tax efficient Joint Venture structures on their clients' behalf.  It is clear that any reduction in support will also reduce the level of rent payable to the landowner" Jamie Younger concludes.