Mr Speaker, with your permission I would like to make a statement on ending new subsidies for onshore wind.
This Government is committed to meeting objectives on cutting carbon emissions and to continue to make progress towards the UK’s 2020 renewable energy targets.
The renewable electricity programme aims to deliver at least 30% of the UK’s electricity demand from renewables by 2020.
We are on course to achieve this objective. Renewables already make up almost 20% of our electricity generation and there is a strong pipeline to deliver the rest.
As we decarbonise it is imperative that we manage the costs to consumers. Although renewable energy costs have been coming down, subsidies still form part of people’s energy bills and as the share of renewables in the mix grows, the impact gets proportionally larger.
Mr Speaker, it is one of this Government’s priorities to bring about the transition to low carbon generation as cost effectively and securely as possible.
The Levy Control Framework, covering the period up to 2020/21 is one of the tools to help achieve this. It limits the impact of support for low carbon electricity on consumer bills.
We have a responsibility to efficiently manage support schemes within the Levy Control Framework to ensure that we maintain public support for the action we are taking to bring down carbon emissions and combat climate change.
Government support is designed to help technologies stand on their own two feet, not to encourage a permanent reliance on subsidy.
We must continue to take tough judgements about what new projects get subsidies.
Onshore wind has deployed successfully to-date and is an important part of our energy mix.
In 2014, onshore wind made up around 5% of electricity generation, supported by around £800m of subsidies.
At the end of April 2015, there were 490 operational onshore wind farms in the UK, comprising 4751 turbines in total.
These wind farms have an installed capacity of 8.3GW enough to power the equivalent of over 4.5 million homes.
The Electricity Market Reform Delivery Plan projects that we require between 11-13 GW of electricity to be provided by onshore wind by 2020 to meet our 2020 renewable electricity generation objective while remaining within the limits of what is affordable.
We now have enough onshore wind in the pipeline, including projects that have planning permission, to meet this requirement comfortably.
Without action we are very likely to deploy beyond this range.
We could end up with more onshore wind projects than we can afford – which would lead to either higher bills for consumers, or other renewable technologies, such as offshore wind, losing out on support.
We need to continue investing in less mature technologies so that they realise their promise, just as onshore wind has done.
It is therefore appropriate to curtail further subsidised deployment of onshore wind, balancing the interests of onshore developers with those of bill payers.
This Government was elected with a commitment to end new subsidies for onshore wind and also to change the law so that local people have the final say on onshore wind applications.
We are now acting on that commitment.
Alongside proposals outlined within the new Energy Bill to devolve decision making for new onshore wind farms out of Whitehall, My Rt Hon Friend the Secretary of State for Communities and Local Government has set out further considerations to be applied to proposed wind energy development in England so that local people have the final say on onshore wind farm applications.
I set out to Parliament on 18th June proposals to end new subsidies for onshore wind, specifically in relation to the Renewables Obligation, which will be closed to new onshore wind from 1st April 2016 – a year earlier than planned.
Mr. Speaker my Department’s analysis indicates that, after taking account of an early closure, onshore wind deployment under the RO will be in the region of 11.6GW.
With this capacity, and that of onshore wind projects that have received support through the new Contracts for Difference, we expect around 12.3GW of onshore wind to be operating in the UK by 2020 supported by the Levy Control Framework providing around 10% of electricity generation.
This puts us above the middle of the deployment range set out in the EMR Delivery Plan, our best estimates of what we would need to meet the planned contribution from renewable electricity to our 2020 targets.
I have proposed a grace period which would continue to give access to support under the RO to those projects which, as of 18th June 2015, already have planning consent, a grid connection offer and acceptance and evidence of land rights for the site on which their projects will be built.
We estimate that around 7.1 GW of onshore wind capacity proposed across the UK will not be eligible for the grace period and are therefore unlikely to go ahead as a result of announcement of the 18 June.
That equates to around 250 projects totalling around 2500 turbines now unlikely to be built.
Therefore, by closing the RO to onshore wind early, we are ensuring that we meet our renewable electricity objectives, while managing the impact on consumer bills and ensuring that other renewables technologies continue to develop and reduce their costs.
Consumer bills will not rise because of this change. Indeed, those onshore wind projects unlikely now to go ahead would have cost hundreds of millions of pounds.
I believe this draws the line in the right place.
In advance of this announcement, I and other Ministers and officials have been discussing these proposals with the Devolved Administrations in Wales, Northern Ireland and Scotland.
Now want to hear the further views from devolved administrations, and also industry and other stakeholders.
This is just the beginning of the process, and we will continue to consult with them as we move towards implementation.
The changes to the Renewables Obligation do not affect remote island wind proposals which would not have been in a position to receive RO subsidy even under previous timelines and I will be saying more about how future CFD projects will be treated in due course.
But I am particularly conscious of the fact that 68% of the onshore wind pipeline relates to projects in Scotland.
I will continue to consult with colleagues in the Scottish Government, indeed I am meeting the Scottish Energy Minister, Fergus Ewing, on Wednesday.
And by implementing these changes through primary legislation, they will be subject to full parliamentary scrutiny including from Members representing Scottish constituencies.
Mr Speaker, with regard to Contracts for Difference,
We have the tools available to implement our manifesto commitments on onshore wind and will set out how we will do so when announcing plans in relation to further CfD allocations.
I will also shortly be considering options for future support for community onshore wind projects that might represent one or two turbines, through the feed-in tariff (FITs) as part of the review that my department is conducting this year.
I do not wish to stand in the way of local communities coming together to generate low carbon electricity in a manner that is acceptable to them, including through small scale wind capacity.
However, that action must be affordable as well as acceptable.
Mr Speaker, clean energy doesn’t begin and end with onshore wind.
Onshore wind is an important part of our current and future low-carbon energy mix.
But we are reaching the limits of what is affordable, and what the public is prepared to accept.
We are committed to meeting our decarbonisation objectives. The changes I have outlined to Parliament will not change this.
And I look forward to having meaningful discussions, with industry, with other stakeholders and with colleagues in the House and in Scotland, Wales and Northern Ireland, on how we move forward.