UK Wind Subsidy Cuts Smaller Than Feared

The depth of proposed cuts to UK wind energy subsidies is still unknown, but reports suggest a 10% reduction rather than the 25% cut that has been feared.

Today, UK Energy Secretary Ed Davey ruled out the 25% decrease, but declined to provide a specific figure while closed-door negotiations continue, reports Bloomberg.

Davey’s Liberal Democratic party has proposed a 10% decrease, while Conservatives backed by the Chancellor of the Exchequer George Osborne want to slash them 25%.

British lawmakers wanted the decision before Parliament takes its summer recess, but that’s now unlikely.

Davey said during a meeting of the energy and climate committee:

"There’s no one arguing for the sorts of cuts you’ve seen in the newspapers, like 25%. The Treasury has been working very well with the department. The critical thing is that when we announce it the decisions are evidence-based."

The subsidy cuts being considered would apply from April 2013 through 2017. 

Britain’s target is for 18 gigawatts (GW) of offshore wind by 2020, up from 2 GW today. Some worry the subsidy changes will make this goal hard to pull off. 

“That’ll be the true tragedy of all of this," Gordon MacDougall , chief operating officer at the developer Renewable Energy Systems Ltd., told Bloomberg. "Were the government to withdraw and do an about-turn on one of the cornerstones of its policy objectives to be the ‘greenest government ever,’ " the impacts extend beyond onshore wind to “anybody investing in anything in the U.K.”

Subsidies for UK wind energy will reach an estimated $1.55 billion this year, according to estimates cited by Bloomberg. But Davey has said the industry could be worth almost $190 billion to the UK economy.

The UK is home to the world’s biggest offshore wind farm, the 367 MW Walney Farm that will power 320,000 homes. In early July, the government greenlighted two projects that total over 1 GW of offshore wind. The farms represent an investment of about $4.66 billion and will generate electricity for an estimated 730,000 homes.

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