LONDON (Reuters) - Prime Minister David Cameron’s Conservative party pledged to end government subsidies for onshore wind farms if it wins a national election next year, increasing uncertainty for investors in renewable energy.
Michael Fallon, a Conservative energy minister, said that onshore wind still had a role to play in helping Britain meet its energy needs and renewable energy targets but that the industry no longer required government subsidies.
“We now have enough bill payer-funded onshore wind in the pipeline to meet our renewable energy commitments, and there’s no requirement for any more,” Fallon said, in comments released by his office on Thursday.
“That’s why the next Conservative government will end any additional bill payer subsidy for onshore wind and give local councils the decisive say on any new wind farms.”
Onshore wind farms currently in the planning system will still benefit from subsidies, he added, but any further projects will no longer receive support.
Onshore wind farm projects will also be subject to tighter local planning rules under the Conservative Party’s plans.
The government’s renewable subsidy regime has always foreseen an end to direct support once technologies are able to compete commercially. The government pushed through cuts to onshore wind subsidies late last year but boosted support for offshore wind.
“Onshore wind has the advantage of being one of the most affordable renewable energy sources,” the Grantham Research Institute on Climate Change and Environment at the London School of Economics says on its website.
In Britain, “generating electricity from onshore wind turbines typically costs around 7-9 pence per kilowatt-hour”, which is around half the cost of offshore wind and slightly cheaper than nuclear power, the institute found.
“Onshore wind generation is still slightly more expensive than fossil fuels,” it said, citing 4.1-7.5 pence per kWh for gas-fuelled plants, “but its price is expected to fall in the coming years.”
Investors in renewable energy said the Conservative party’s pledge was creating uncertainty for onshore wind investments beyond 2020, the year when Britain’s target to generate 15 percent of its energy from green sources has to be met.
“(This announcement) reinforces questions about the prospects of renewable energy post-2020, when the current UK and EU frameworks expire,” said Tom Murley, responsible for renewable energy funds at HgCapital.
The future of onshore wind has divided the government. Cameron’s junior coalition partner, the Liberal Democrats, are keen to encourage investment in all forms of renewable energy.
“Putting the brakes on onshore wind would be disastrous for business and jobs in our growing green economy,” said Edward Davey, the Liberal Democrat Energy and Climate Change Secretary.
A growing list of companies have recently scaled back both offshore and onshore wind projects in Britain, saying they were too expensive to build.
The Conservative party, whose support base is concentrated in rural communities in the south-east of England, where many voters say wind farms are noisy and spoil the landscape, has gone off the technology.
Thursday’s announcement cited opposition from local communities.
The Conservatives, the senior partner in the two-party coalition, trail the opposition Labour party in polls by about 4 percentage points. Labour leader Ed Miliband said this month that Britons had to embrace onshore and offshore wind farms.
“We urge the Conservative Party to work with the industry on cost reduction and stop making arbitrary comments which threaten investment in all energy types,” said Maria McCaffery, chief executive of Britain’s renewable energy lobby group.
Dale Vince, founder of energy supplier Ecotricity which produces electricity from onshore wind farms, said the prime minister was putting the interests of his political party ahead of the interests of his country.
“Before the last election, David Cameron promised to lead the greenest government ever. That promise lies in tatters,” he said.
Additional reporting by Karolin Schaps and Nina Chestney; Editing by Andrew Osborn and Jane Baird