Scotland warns £12bn of green energy investment is at risk from DECC cuts

by Search Gate staff. Published Wed 22 Jul 2015 13:20, Last updated: 2015-07-22
Scottish Government goes on the attack after further DECC delays
Scottish Government goes on the attack after further DECC delays

A further delay in providing much-needed clarity on support for renewables could “cause damage to Scotland’s offshore wind and islands renewable energy projects” according to Scotland’s Energy Minister Fergus Ewing.

The Department of Energy and Climate Change (DECC) has postponed vital announcements on Contracts for Difference until at least the autumn. DECC had previously committed to publishing information on the availability of support to the offshore wind industry and projects on the Scottish islands in July.

These projects, which have the potential to bring huge benefits to Scottish industry and island communities in particular, can take many years to complete. That is why investors in these projects require certainty now for those projects that are expected to commission around the end of the decade.

DECC also announced their intention to withdraw support for new solar energy farms from April next year.

Mr Ewing said: “Today’s announcement will prolong uncertainty for the renewables industry in Scotland.

“The UK Government promised that they would end the lack of clarity about the future of renewables, that they would deliver a clear statement of policy towards 2030 and how they will maintain and achieve their climate targets. They have decided to delay the announcement which was promised for this month for an indefinite period, and I fear that that will directly affect jobs and investment Scotland. These would include not only jobs in the offshore wind sector itself but also in related sectors such as fabrication.

“There are also over three thousand jobs dependent on solar, these and thousands more in other types of low carbon renewable energy in Scotland are now under threat.

“The low carbon energy industry has made a lot of progress in reducing costs and is well on its way to doing without financial support but today’s announcements will slow the pace of cost reduction. While this industry is making good improvements the UK Government continues with its obsession on nuclear energy by building the world’s most expensive power station, at a cost to the taxpayer and bill payer of around forty five billion pounds.

“We have many consented offshore and island renewables projects, and people in our islands communities who have been promised clarity by the UK government this month will once again be left frustrated.

“Scotland is at the forefront of the renewables industry and this decision will once again have a damaging impact here and I am disappointed the UK Government have failed to properly consult with the Scottish Government on this issue.”

Niall Stuart, Chief Executive of Scottish Renewables, said: "Contracts for Difference are essential to underpin the big capital investments in renewables, nuclear, and carbon capture and storage. Their introduction has already resulted in significant reductions in cost from solar, and onshore and offshore wind.

"The postponement of this year's auction, and the lack of clarity over future dates and budgets, means the entire industry is totally in the dark about if or when companies will be able to bid for a contract for their power.

“This will result in a freezing of project development, and threatens the timelines required to connect up the Western Isles, Orkney and Shetland.”

The early end of subsidies for onshore wind which was announced last month could risk as much as £3 billion pounds of investment in Scotland and 5,400 jobs. Today’s announcement from DECC means that further investments with a value of some £9bn could now be put on hold.

Mr Stuart said: "Individuals have spent years of their working lives, and companies invested millions of pounds in good faith to get their projects to the stage where they can go for these contracts, and this uncertainty will just further erode investor confidence in the energy sector.”

Mr Stuart did however, highlight the Government’s intention to publish details on support for renewables and other forms of clean electricity beyond 2020 as a positive for the sector:

"Whilst we are pleased to see the Government seek to give some indication of support beyond 2020, it is vitally important that we get an announcement in the autumn to provide some clarity to the sector on the Government's intentions between now and the end of the decade or we risk significant investment - and the jobs and environmental benefits that would bring - going elsewhere."

Commenting on the changes to subsidies for small scale renewable energy projects known as the Feed-in Tariff (FiT), Mr Stuart said: “Scotland has an abundance of small scale hydropower and a vibrant solar energy sector. These smaller schemes have been attractive to developers and communities alike but those wishing to build a project now will not know what financial support they will received until operational. By DECC’s own admission this move will mean less projects coming forward and make securing finance increasingly difficult.”

Mr Stuart said: “There is now so much uncertainty across the whole sector that developers of almost every technology will be hitting the pause button on planned projects, resulting in a hiatus in the industry’s growth, and a slowdown in jobs and investment.”

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