Wind farm projects in North East cancelled after Government subsidy removal

Developments in Northumberland will go ahead during 'grace period' allowed by Government

A wind farm
A wind farm

Energy Secretary Amber Rudd says the Government’s decision to axe subsidies for onshore wind will lead to the cancellation of hundreds of projects. Peter McCusker reports.

Proposals for at least six new wind farms in the North East look set to be scrapped with objectors in Sedgefield having the most to celebrate as a controversial 24-turbine scheme is now unlikely to proceed.

However, those hoping to see an end to any further schemes in Northumberland look set to be disappointed with work set to start on two major new developments.

In fact, at least eight new onshore wind farms look set to be built in the region in the coming months and years – adding to the 30-plus already operating - during what the Government has described as a ‘grace period’ for developers.

When announcing its policy U-turn in the Commons earlier this month, Energy Secretary Amber Rudd said projects which ‘have planning consent, a grid connection offer and acceptance, and evidence of land rights for the site on which their project will be built’ can proceed during the grace period.

This equates to over 10 UK schemes, with seven of these in the North East including a 16 turbine development on the Ray Estate, just off the A696 at Kirkwhelpington, Northumberland.

A spokesperson for the developer Vattenfall said it was pushing ahead with its plans for this site: “Vattenfall has discharged all planning conditions associated with the Ray Wind Farm. As a result, we will set out a detailed forward programme to the local community shortly with a view to delivering first power in late 2016.”

Other schemes set to proceed include Peel Energy’s proposals for 13 Northumberland turbines – each up to 126 metres high – near the village of Widdrington, as well a number in the south of the region.

But energy giant E.on has put on hold its plans for the 24-turbine Isles wind farm, at Bradbury, near Sedgefield, County Durham

A spokesperson said: “We are currently reviewing some of our onshore wind farm development projects including the Isles, which if approved could feature up to 24 turbines with a capacity of up to 48MW.

“Onshore wind remains one of the cheapest low carbon technologies available to us and is an important part of our energy mix in the UK. We support the efforts across the industry to bring down costs and believe it is right that all technologies should ultimately stand on their own two feet without subsidy.

“While we are disappointed that DECC have decided to close the Renewable Obligation earlier than originally planned, we welcome the use of grace periods to mitigate some of the impact for investors.”

Hartlepool company Seneca Global Energy looks set to see its proposals for three schemes in the town fall short.

It did not respond to request for a comment from Journal Energy but it will feel aggrieved as its proposals were called in by former Local Government Minister Eric Pickles in March, and had not progressed since.

The Conservative Party Manifesto for this May’s election outlined the Government’s proposals to halt to subsidies for onshore wind farms.

Last month Ms Rudd told the Commons that the main subsidy scheme, the Renewables Obligation (RO), would be shut down for schemes over 5MW a year earlier than planned, in April 2016.

While new schemes can bid for subsidies through the new Contracts for Difference (CfD) regime, the Government is likely to favour other renewable technologies - offshore wind and solar - in these competitive auctions. Although it is unlikely to openly admit this due to concerns it may fall foul of EU state aid rules.

Ms Rudd told MPs last week that the Department of Energy and Climate Change (DECC) estimated that about 7.1GW (gigawatts) of the onshore wind capacity proposed across the UK “will not be eligible for the grace period and is therefore unlikely to go ahead”.

“That equates to about 250 projects, totalling about 2,500 turbines, that are unlikely to be built,” she said. “The onshore wind projects that are unlikely to go ahead could have cost hundreds of millions of pounds,” she said.

However, Ms Rudd said that an estimated 4GW of new onshore wind will still be developed by 2020, bringing the UK’s total capacity to 12.3GW.

The U-turn, whilst delighting many objectors, has come under fire from the renewable lobby, which argues onshore wind is one of the cheapest sustainable technologies and should be deployed further to hit low carbon emission targets.

RenewableUK’s chief executive, Maria McCaffery said: “The Government’s decision to end prematurely financial support for onshore wind sends a chilling signal not just to the renewable energy industry, but to all investors’ right across the UK’s infrastructure sectors.

“It means this Government is quite prepared to pull the rug from under the feet of investors even when this country desperately needs to clean up the way we generate electricity at the lowest possible cost – which is onshore wind.”

She also highlighted how the subsidy axe would impact on jobs. “19,000 people owe their livelihoods to the UK’s onshore wind industry – this could have increased to more than 37,000 by 2023 if Government policy had remained supportive.”

Dr John Constable, director of Renewable Energy Foundation, a UK charity that has been a long-term critic of subsidies to renewables in general and onshore winds in particular.

He said: “This is a long overdue correction to more than a decade of misguided political intervention in the markets and the planning system that has forced onshore wind farms onto unwilling consumers and local populations, harming the reputation of renewable energy and rewarding speculative investors for mass deployment of inadequate technologies.”

“This may not be quite the end of the story; the onshore wind industry has received nearly £4bn in subsidy since 2002, and was counting on many billions more. They are well-funded, and are unlikely to give up without a fight in the courts.”

One North East company affected by the announcement is the Durham-based Banks Group with its developments in Guisborough, North Yorkshire, falling outside the grace period.

However it won contracts to develop three schemes in the first ever CfD auction, and will proceed with these along with a further two in the North East which meet the grace period criteria.

Richard Dunkley, executive director at Banks Renewables said: “We will be considering the implications of the Government’s announcement and proposed legislation over the next few months.

“Onshore wind is clearly the cheapest form of scalable renewable energy. The recent CfD auction awarded three of our sites contracts to supply electricity for £82.50/MWh. In the same auction, offshore wind secured contracts at £114/MWh.

“The government policy to stop onshore wind forces consumers to pay for more expensive technologies like offshore wind, instead of onshore wind, which can only result in higher bills for these consumers.”

At the weekend energy minster Andrea Leadsom said future onshore wind farms could be built without any Governemnt subsidy. Many operating in the North East onshore wind industry will hope so – objectors will hope not.

PLANNING proposals

As well as ending subsidies early the Government has also said planning authorities need to adopt new guidelines when considering applications for new sites

The Conservatives say there will now be two new planning tests meaning councils can only approve windfarms on sites that have been clearly designated as part of a local or neighbourhood plan, and where the proposed project has the backing of the local community.

National planning consultancy Nathaniel Lichfield & Partners (NLP) monitors the status of local and neighbourhood plans across England.

It says that in the North East there are no up-to-date adopted local or neighbourhood Plans, save for the Newcastle Gateshead Core Strategy and the Middlesbrough Housing Local Plan, neither of which allocate any suitable areas for onshore wind.

NLP went on to say that in meeting the test of community backing, developers will now be questioning what this constitutes and how do they go about securing it?

Gayle Black, senior planner at the Newcastle office of NLP, said: “The new community support test raises a number of questions that will probably only be answered through future application and appeal decisions.

“On the face of it, the latest revisions to the Planning Practice Guidance present a unique and previously unprecedented opportunity for local communities to take the lead in policy and decision making.

“At present, it is unclear how local planning authorities will interpret these changes but they do appear to make it much more challenging to obtain planning consent for onshore wind projects.” With few UK local plans designating sites for low carbon energy many in the green lobby fear these new regulations will stymie future growth of onshore wind, even if it reaches price parity with fossil fuel power generation.

Machiavellian motives?

The measures announced by Ms Rudd will be included in a new Energy Act, which is due to come before Parliament in the autumn.

With the subsidies due to end in April next year the Government will be under pressure to hit the deadline of next April with many in Parliament, including the Scottish Nationalist Party, opposing the plans.

The Government is said to be using primary legislation to avoid the similar successful judicial review which followed its policy U-turn on feed-in-tariffs for the solar industry in 2012.

Mark Whitehead, partner and head of the energy team at Newcastle-based law firm Ward Hadaway said it is possible to view the proposed arrangements in a more ‘Machiavellian light’.

He says the proposals go beyond what was in the Conservative Election Manifesto as they by changing the existing law governing RO payments in England, Northern Ireland and Scotland.

He said: “Consequently, to deliver on DECC’s statement nationally, the Scottish Parliament would need to approve the changes in Scotland - it is within the power of the Scottish Parliament, and by implication the SNP, to refuse to make the changes in Scotland, thereby preserving the status quo for Scottish projects.

“Were this to be the case, it is likely that the Treasury would claim that the full lifetime cost of the RO for any projects closed in Scotland between April 2016 and April 2017 will have to be met from Scottish coffers.

“Given that simply following the manifesto commitment would not have created this helpful accident for the Government, is the Government is looking to create a position whereby the SNP are forced to either finance the RO, or fall in line?”

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