United Kingdom

United Kingdom

UK reveals boost to offshore support

UK: The UK government has revealed plans to boost subsidies to offshore wind while cutting support for both onshore wind and solar.

According to the government's national infrastructure plan, support for onshore wind will be cut by £5/ MWh (EUR 6/MWh) to £95/MWh from 2015. It will fall to £90/MWh in 2017-19.

Offshore prices will stay at £155/MWh in 2015, before falling to £150/MWh in 2016-17 and £140/MWh in 2018-19.

Under strike prices revealed in July, by 2019 offshore wind was to cost £135/MWh and onshore £95/MWh.

The scheme is part of the UK government's contracts for difference programme that will form part of the upcoming energy bill.

The changes will take place from 2015 and will only apply to new projects. The government has said onshore and solar would be cut because they no longer needed as much support.

Many observers have pointed out that although onshore wind's cost of energy is falling, the subsidy reductions could affect community wind projects that are around the feed-in tariff level. It is predicted some could fall by the wayside.

However, treasury minister Danny Alexander was quoted as saying the changes represented "a rebalancing", while the Department of Energy and Climate Change hailed "an additional £40 billion investment" up to 2020.

Alexander said the government is committed to reaching a target of 10GW of offshore capacity by 2020. This is well below the 18GW figure set out in the UK Renewable Energy Roadmap — a goal that has been characterised as unrealistic by experts.

Energy minister Ed Davey said: "Our reforms are succeeding in attracting investors from around the world, so Britain can replace our ageing power station and keep the lights on.

"Investors are queuing up to express their interest in these contracts. This shows that we are providing the certainty they need, our reforms are working and we are delivering ahead of schedule and to plan."

While having the largest offshore wind capacity in the world, the UK will need to add substantially more if it is to reach its 2020 renewables target.

Brent Cheshire, UK chairman of Danish utility and offshore developer Dong Energy, said: "This is a concrete step in the right direction from the government towards fulfilling the next phase of offshore wind development in the UK. [It] gives us the confidence to move forward with our future pipeline of projects."

Commenting on the cut to the onshore strike price, David Ferris, energy and utilities head at legal firm Osborne Clarke, said: "At first glance, it would be easy to say 'this is going to affect onshore wind and solar massively'.

"[But] this only affects future onshore solar and wind projects that are over 5MW and are not yet accredited. In short, there are lots of great renewable projects that this simply doesn't affect."

According to the European Renewable Energy Council, the UK is 25th out of 27 member states in terms of its renewables contribution.

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