European Commission adding pressure to reduce renewable technology subsidies

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The European Commission (EC) may be set to move against prolonging subsidies for some renewable electricity technologies, particularly onshore wind and solar photovoltaic cells, according to press reports. The commission is to argue that onshore wind and solar photovoltaic sectors are approaching maturity and should be expected to operate without public subsidy by the end of the decade. Officials are privately advising ministers of the need to reduce subsidies. The move would see onshore wind and solar-produced energy projects effectively competing against each other to secure subsidies.

What’s the current position?

Currently, the operators of onshore wind generators receive guaranteed prices of about £90 per megawatt hour, compared to wholesale energy prices being around £55 per megawatt hour.

Pressure from the EC is expected to coerce the Coalition government into implementing a more sparing means of support for onshore wind and solar power.

As the technologies have matured over time and costs have fallen significantly, ministers have already started reducing subsidies.  Energy Secretary Ed Davey has recently indicated that he was preparing to announce that onshore wind and solar farm developers would have to compete for an ever-dwindling pool of public subsidies.  This could mean that a number of smaller and community-based windfarms could cease to exist.

Are cuts good news?

Nina Skorupska, Chief Executive of the Renewable Energy Association, believes that any such cuts are “good news” for the sector: “The real reason that support for solar and onshore wind will go down is that they are leading the race for cost-competitiveness with fossil fuels. Government policy is working and bringing down costs.”

The reports come after the EC launched a consultation on reforming state aid support for renewable energy projects to ensure that subsidy schemes accurately reflect the declining cost of clean technologies.

Connie Hedegaard, the EU’s Climate Action Commissioner, has said: “My view is that if you have mature technologies, renewables or not, they should not have state aid. If they can manage themselves why have state aid?”

For more information, help or advice please contact Andrew Davison on 0191 211 7950.