Industry leaders and campaign groups have today warned that Government “dithering” on renewable energy subsidy cuts could prove a disaster for the sector.
Energy Secretary Ed Davey today admitted he could not announce revised details of the Renewable Obligation Certificates (ROC) scheme.
"We have had difficulties in finalizing it," he told a Parliamentary committee. "We will make an announcement as soon as possible. I understand the importance of getting a decision out there."
But Phil McVan, managing director of Myriad CEG Wind, led angry calls following the announcement that the Government will now delay a decision on making an announcement on subsidies until the autumn.
He believes the uncertainty that exists over FiT payments is set to cause “real harm” and could lead to significant job losses, with investors simply choosing to “sit on their hands”.
He said: “How are businesses supposed to plan, manage and grow in this climate of continual Government chop and change? It simply creates uncertainty? We need clear direction.
“The situation that is developing hugely affects the confidence of businesses and investors. We seem to be in a continual state of confusion, as far as green energy is concerned.
“The Government’s dithering will now create similar mayhem to that we saw last year in the Solar PV sector, which resulted in the loss of 24,000 jobs. Potential investors will delay their decisions. Businesses will be unable to plan and implement meaningful strategies to grow the sector.
“What is needed is a period of certainty to allow businesses to commit and deliver whilst restoring the confidence of investors who in uncertain times will just ‘sit on their hands’.
“That will cause great damage yet again to jobs and investment at a time when Britain needs a strong focused renewable sector delivering jobs and providing greater energy security.”
And Jenny Banks, energy policy officer at WWF-UK said: "It appears that Treasury are actively seeking to undermine the renewables industry. It’s ironic given this sector is the one shining beacon of potential growth and job creation.”
WWF said investor confidence had already been hit once this year by the Government's poor handling of the cuts for solar power. The announcement on the Renewables Obligation has already been subject to substantial delay and now the period of uncertainty has been prolonged.
The campaign group says the lack of Treasury accountability for its influence over energy policy has recently been highlighted by the Conservative chair of the Energy and Climate Change Select Committee Tim Yeo, who recently complained about Minister Chloe Smith’s refusal to give evidence to the committee on the forthcoming energy bill.
Jenny Banks added: “Osborne appears to be digging his heels in on an argument about £20 million a year on the level of support for onshore wind. This is dwarfed by the £2.8 billion a year reported to be required by EDF to support new nuclear power which, it has emerged, is more costly than any form of wind generation. Yet we hear nothing from the Treasury about this cost.
"Wind power is the cheapest of the low carbon technologies and by delaying this announcement the government is undermining investment in this key growth industry, forcing the UK to rely on more expensive and polluting forms of generation"
RenewableUK, the trade association representing the wind, wave and tidal energy industries, also urged the Government to announce a decision on financial support for the sector as a matter of urgency.
It pointed out a decision on Renewables Obligation (RO) banding levels had originally been expected in the spring, but has been delayed repeatedly since then. An announcement was anticipated before parliament went into recess today, but has been delayed further while more discussions take place.
Maria McCaffery, Chief Executive of RenewableUK, said: “RenewableUK is urgently calling for the Government to reach an agreement on the RO banding levels as quickly as possible. The economic evidence is crystal clear – it shows that there is no case for cutting support for onshore wind beyond the 10% originally proposed and consulted upon in the Government’s own review.
“Any further delay in an announcement could have a devastating impact on investor confidence, job creation and the deployment of clean energy. It would be unacceptable if the decision were to be delayed until September – especially as the new banding levels are due to come into force just seven months later, in April 2013.
“It is imperative that investment and job creation are not harmed in one of our key growth sectors. The industry is demanding clarity at the earliest possible opportunity as a matter of urgency”.
Solarcentury, the UKs most experienced solar PV installer and Lightsource Renewable Energy Limited, the country's leading utility scale solar plant developer, owner and asset operator have expressed concern about today's decision to delay the outcome of the ROC banding review. They have called on the Department for Energy and Climate Change (DECC) to recognise the role that solar plants can play in delivering the Government's 2020 renewable energy target.
The companies' call comes as they near completion of three utility scale solar developments totalling 11 MWp, the equivalent of 5,500 household installations. All three developments will be completed before the feed-in tariff (FIT) for large-scale developments drops from 8.9p to 7.1p on 1 August. Upon commissioning, these assets will become the latest additions to the existing Lightsource Renewable Energy operational asset portfolio.
For the remainder of this financial year, investment into the development of solar plants is likely to switch to the Renewables Obligation which remains at the equivalent of the current 8.9p feed-in tariff rate for the remainder of 2012/13.
Frans van den Heuvel, CEO, Solarcentury said: “We see a very positive future for further utility scale solar plant developments under the Renewables Obligation (RO) through the remainder of 2012/2013, but we are concerned that the delay announced today jeopardises future investment. Solar plants can play a major and cost-effective role in the UKs clean energy future. They are easy to deploy, effective and broadly welcomed by the public and business community alike. As such, Solarcentury is calling for the Government to encourage, not hinder their progress.”
Nick Boyle, CEO of Lightsource Renewable Energy said: “It has been made very clear over the last few years that solar power is a key component in the UK’s drive towards its renewable energy targets. We hope solar subsidies like FIT and ROC schemes will continue at sensible levels to assist in keeping solar competitive with other energy sources thus supporting our ultimate goal of reaching grid parity. This would also help to build a stable and profitable industry that will no longer need to rely on government incentives by as early as 2017 if current estimates prove accurate”
Andrew Horstead, risk analyst at energy and carbon management specialists Utilyx, said: “While it’s undoubtedly frustrating to see the ROC decision delayed, it’s important that the final decision on subsidies reflects the economics rather than the emotions of the situation.
"To rush the ROC announcement today could have meant possible u-turns further down the road which would only add to long-term uncertainty around renewable investment which we can ill-afford. Following the recent chaos around the solar feed-in-tariffs, it’s right that the government takes time to ensure the rates are right and provide the certainty that investors crave rather than bowing to political pressure.”
“However, it’s important that the final ROC decision considers rebalancing the relative support provided to on and offshore wind. The cost of onshore wind is converging towards parity with conventional generation technologies and will be appreciably cheaper than gas and coal generation fitted with carbon capture and storage.
"By comparison offshore wind is 30-40% more expensive than onshore wind, but has significantly greater scale potential. All options must be considered if we are to get both the right levels of investment needed in renewable energy and the right return on those investments.”
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