Last week the UK government announced the ending of public subsidies to new onshore windfarms one year earlier than planned. [Engerati-UK Onshore Windfarm Subsidies Take A Cut]
Subsidies abound in today’s energy industry and it is widely recognized, especially for the wider spread adoption of new technologies, that subsidies from governments are a necessity. However, it is also expected that ultimately the technology should be able to stand on its own feet without subsidies. The thorny question then arises as to when the subsidy should be withdrawn, for which there is probably no right answer that will satisfy all parties. A scanning of press reports on this issue reveals an industry condemnatory of the change, while minister Amber Rudd argues that the capacity of existing projects with those in the pipeline is “enough … to play a significant part in meeting renewable energy commitments” being in the “middle range” of the Energy Market Reform delivery plan (published under the previous government in December 2013).
Although in her published statement to parliament Rudd didn’t specify how or if the subsidy would be reallocated, a Bloomberg report (1) quotes her as saying that by scrapping payments to onshore wind, more money can go to costlier, less mature renewables – which is most likely to mean offshore wind as the next major renewable source under development and in which the UK is a leader. [Engerati-Offshore Windfarms Set To Reach New Levels] This is good for diversification of energy resources. It may ultimately also provide good value for money. The development costs of offshore wind are significantly higher than onshore wind, but the increasingly higher capacity factors – in 2013, onshore achieved less than 26% while offshore achieved almost 34%, according to latest DECC statistics (2), and levels of up to 50% are in prospect – are fast pushing down the lifetime costs.
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