Bloomberg News

Scotland Cuts Wind Subsidy 10% to End Uncertainty

July 23, 2012

Scotland said it will cut subsidies for onshore wind power by 10 percent to end uncertainty about support for the industry after the U.K. government last week delayed a decision on funding.

The U.K. Department of Energy and Climate Change last week delayed a final decision on support for low-carbon energy under the Renewables Obligation program after a dispute with the Treasury, which is seeking bigger cuts to land-based wind power.

“This wholly unnecessary uncertainty is jeopardizing future investment,” Scottish First Minister Alex Salmond wrote in a letter to U.K. Energy and Climate Change Secretary Ed Davey, according to a statement today. “The renewable industry requires and deserves a clear statement of intent.”

The U.K. is trying to cut its emissions in half by 2027, an effort which largely involves decarbonizing the country’s power sector. While onshore wind is the cheapest renewable technology, it faces opposition from people in rural areas, and Osborne had been seeking a 25-percent cut in support for the technology.

Chancellor of the Exchequer George Osborne, a Conservative lawmaker, wrote to Davey this month offering to drop his demands for bigger cuts to onshore wind power so long as the Liberal Democrats, Davey’s party and the junior partner in the U.K.’s coalition government, backs down on inflexible decarbonization targets, the Financial Times reported today.

Energy Department

A spokesman for the energy department declined to comment on or confirm Osborne’s letter and said the government is working to finalize the plans as soon as possible.

From April 2013 the Scottish government will cut the number of so-called renewable obligation certificates awarded for each megawatt-hour of power from land-based wind turbines to 0.9 from 1, the Scottish government said today in its e-mailed statement. Full rates for other technologies will be published “shortly,” Salmond wrote.

“The banding regime allows Scotland to set its own rates, although the costs are ultimately borne by consumers across the United Kingdom,” the U.K. energy department said in an e-mailed statement. “This is an important decision affecting billions of pounds of investment and it is vital that we get the Renewables Obligation banding regime right.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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