News review
In brief
Sustainable Policy
Lack of consistent
policy hinders
creation of low
carbon economy
George Osborne recently
announced the Government’s
decision to cancel renewable
electricity sources exemption
from the Climate Change Levy –
a move that is estimated to cost
green energy producers around
£450m in the current financial
year, according to trade
association RenewableUK. The
Treasury’s Productivity Plan
published on 10 July also
confirmed that the Government
does not intend to proceed with
the zero carbon Allowable
Solutions carbon offsetting
scheme (a requirement on
builders to offset new-build
carbon emissions by making a
contribution to carbon
reduction elsewhere), or the
proposed 2016 increase in onsite energy efficiency standards.
The fund manager Neil
Woodford, who has Drax
amongst his holdings, recently
sent an open letter to
Government stating its decision
to make renewable firms pay the
levy will create mistrust amongst
investors as it can no longer be
trusted to fulfil its long term
commitments and consistency is
essential way beyond the length
of a political cycle.
Sustainable Energy
Report reveals
changing toll of
natural disasters
The death count from a series
of natural disasters, including
heatwaves, storms and
earthquakes, has risen during
the first half of 2015,
according to the world’s
largest reinsurance company
Munich Re. In the first six
months, a total of over 16,000
people died in severe weather
events and earthquakes.
This means that, by the end
of June, the number of people
that lost their lives in natural
catastrophes was greater than
in the previous year (2,800).
4 GreenWeek July 24, 2015
Sustainable Policy
Government hits renewables
with string of subsidy cuts
Energy Secretary announces series of cuts to “protect consumers”
By Stuart Qualtrough
he Government spending
T axe
has fallen on
subsidies that support
the renewable energy industry
with the announcement of a
series of cost-cutting measures.
Energy Secretary Amber Rudd
has confirmed reform of the cash
support provided to the biomass
and solar industries, plus a shakeup of the Feed-in Tariff scheme.
The Government says it must
act to tackle a projected overallocation of renewable energy
subsidies and control spending
more effectively.
Financial support for renewable
technologies primarily comes in
the form of subsidies, paid for
through energy bills. The available
subsidies total is capped by the
Levy Control Framework (LCF).
The latest measures include:
• Removing the guaranteed level
of subsidy for biomass conversions
and co-firing projects for the
duration of the Renewable
Obligation, known as
grandfathering. DECC claims this
could reduce the risk of more
allocations under the LCF by
around £500m each year by 2021
• Launching a consultation on
controlling subsidies for solar PV of
5MW and below under the
Renewables Obligation (RO). This
includes consulting on early
closure and grandfathering
• A consultation on changes to the
UK solar industry now faces further uncertainty amid loss of cash support
preliminary accreditation rules
under the Feed-in Tariff (FiT),
scheme followed by a wider review
of the scheme to drive significant
further savings.
The Government will also:
• Set out totals for the LCF beyond
2020, which it claims will provide
the basis for electricity investment
into the next decade
• Set out its plans in the autumn
for future CFD allocation rounds.
Announcing the changes to
bring costs under control, Energy
Secretary Amber Rudd said: “My
priorities are clear. We need to
keep bills as low as possible for
hardworking families and
businesses while reducing our
emissions in the most costeffective way.
“Our support has driven down the
cost of renewable energy
AD sector to fall foul of pre-accreditation shake-up in latest changes
significantly. As costs continue to
fall it becomes easier for parts of
the renewables industry to survive
without subsidies. We’re taking
action to protect consumers, whilst
protecting existing investment”.
Financial support to the
renewable sector has helped new
and innovative technologies and
increased the amount of lowcarbon electricity powering homes
and businesses across the UK.
However, the Office for Budget
Responsibility’s latest projections
show that subsidies raised from
bills are currently set to be higher
than expected when the schemes
under the LCF were set up.
The Government says this is due
to a number of uncontrollable
factors such as lower wholesale
electricity prices, higher than
expected uptake of the demandled Feed in Tariffs and the
Renewables Obligation (such as
solar panels on roofs) and a faster
than expected advancement in
the efficiency of the technology,
meaning renewables are projected
to generate more electricity than
previously projected.
DECC says it will look at
reintroducing pre-accreditation for
community groups in a wider review
of the Feed-in Tariff scheme later
this year. Preliminary accreditation
was introduced to support solar PV
and wind projects above 50kW as
well as to all hydro and anaerobic
digestion (AD) projects.