Delays over a government announcement on the future level of financial
support for onshore wind power in the U.K. is holding up a significant
portion of the GBP5 billion of investment in projects that have planning
consent, but have not yet been given the final go-ahead by their
backers, the director of policy for industry trade body RenewableUK said
Friday.
This uncertainty is sending a bad signal to potential
investors in renewable technologies at a critical juncture for the
industry, said RenewableUK's Gordon Edge. "If at this point we need to
have further changes, it blows the U.K.'s reputation as having a
dependable environment," for clean energy investment, he said.
The debate in the U.K., and several other European countries,
underlines how the continent's economic woes have weakened years of
generous support for the clean energy industry. Like many other
subsidies, financial backing for wind and solar power is in the firing
line as governments scale back spending to meet new austerity budgets.
The U.K.'s Department of Energy and Climate Change, or DECC,
had been expected to publish at the beginning of April the details of
how much financial support wind power projects will receive in the
future. That decision had already been pushed back from October and it
is still not clear when it will be announced.
The financial support is delivered through a complex mechanism
called the Renewables Obligation, which amounts to an indirect subsidy
for various forms of clean energy.
Timing is critical because the U.K. has only eight years in
which to ramp up the amount of green electricity it generates to meet
binding 2020 European Union targets for reducing greenhouse gas
emissions. The U.K. must also ensure enough new generation capacity is
built to maintain power supplies as old nuclear and coal plants close.
Meeting those objectives will cost GBP110 billion, according
to government estimates, and requires money from new investors beyond
the traditional utilities and wind farm developers.
"This general inability of the government to decide this issue
is making it impossible for anyone to actually sign deals...to deliver
projects post-April 1, 2013," said Mr. Edge, referring to the date when
the new regime will kick in. "You can have no certainty at what the
support level will be."
The GBP5 billion of potential investment accounts for 4
gigawatts of wind power capacity, Mr. Edge said. Many of them are
awaiting clarity on the level of financial support, although there are
other issues such as grid connections and radar interference still to be
resolved, he added.
"We're aiming to publish as soon as possible," said a
spokesman for DECC. "We haven't finalized the proposals, it's a complex
process. We're not far off but we can't confirm an exact date at the
moment."
The Financial Times reported earlier Friday that no decision
has been reached because of a disagreement within the government over
the appropriate subsidy level. The U.K.'s Treasury wanted a deeper cut
in financial support than the 10% initially proposed by DECC, the paper
said.
A Treasury spokesman said the department was working with DECC
on the issue.
Earlier in the week, ScottishPower's Chief Corporate Office,
Keith Anderson, said he was worried about the delays to the announcement
on the wind subsidy. ScottishPower is the U.K. unit of Iberdrola SA
(IBE.MC), one of Europe's biggest wind developers.
"One of the key advantages of the U.K. as a place to invest is
the predictable nature and stability of its regulatory regime. Sticking
to the evidence and the timetable is key to investor confidence,"
Anderson said.