An uncertain future for renewable energy

Yesterday the new Energy and Climate Change Select Committee, of which I am a member, had its first chance to question the Rt Hon Amber Rudd MP, Secretary of State, and Stephen Lovegrove, DECC Permanent Secretary, about the Department’s priorities for the next five years.

As an introductory session it was always going to be a fairly uncontroversial two hours. In being relatively new to the role, Rudd was also able to sidestep a series of challenging issues with a promise to review and address them in the fullness of time.

Rudd was at pains to stress that affordability is her priority and that enhanced competition is the means by which she believes it can be achieved, but she also reiterated that the Government remains fully committed to meeting its carbon targets, even if she betrayed a striking indifference to legally binding renewables targets.

There was good news in the promise of a full review of how to improve the UK’s energy efficiency strategy, an admission that more needs to be done with regard to low-carbon heat and a welcome recognition of the opportunities offered by energy storage (an issue that the Committee intends to examine in more detail in the months ahead).

However, there was little to reassure a renewable energy sector bracing itself for sharp cuts in support. The Committe was informed that onshore wind will not be eligible for the next round of contracts for difference (CfDs) after 2020 but no mention was made of this morning’s launch of a consultation on ending Renewables Obligation support for all solar farms, changes to feed-in tariff support mechanisms, revisions to grandfathering conditions and the axing of pre-accreditation rules — a startling omission given that the Committee will now have no opportunity to scrutinise the proposals before consultation closes on 2 September.

The Secretary of State defended the Government’s abrupt move to end key Government support for onshore wind on the basis that the industry will be able to compete on cost in the not too distant future, arguing that concerns to the contrary were unjustified. Of course it’s important that value for money is at heart of decision making on energy and it may well prove that a minority of (large) developers are able to build onshore wind and solar projects without support at some point between now and the end of the Parliament. However, the scale of the build out is almost certain to be lower than previously planned and there is a real risk that in removing certainty prematurely, investor confidence will be damaged and the steep cost-reduction we’ve seen in recent years slowed down.

At a time when Government support continues to flow towards more costly offshore wind and nuclear projects, not to mention polluting fossil fuel plants, it’s a clear signal as to where the Government’s priorities lie. Let’s hope that Rudd is right to predict that the renewables industry will continue to thrive with much lower levels of Government support but I fear that those in the industry warning that they are about to have the rug pulled from under them are right.

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