Renewable subsidy cuts dominate UK energy debate

The UK government’s recent decisions to cut subsidies for some renewable energy technologies were put under the microscope at a London conference.

And there was disagreement on the government’s actions, with some believing it had done the right thing, while others said that the renewable investment climate had been damaged.

Since coming to power after the General Election in May, the Conservative government has reduced support for onshore wind and solar projects, giving the reason that too much had been spent on them during the previous administration, in which the Conservatives shared power with the Liberal Democrat Party. UK Energy Minister Andrea Leadsom

At the EnergyLive2015 conference last week, Energy Minister Andrea Leadsom was – unsurprisingly – adamant that there no U-turn on renewables support and unapologetic for withdrawing and cutting subsidies.

“In no business area would you allow a budget to run away from you,” she said. “Demand-led subsidies where there are not any boundaries is very bad for business. You don’t have to put more pounds in to get better results.

Stating that the government was “not micro-managing the daily electricity supply”, she said that it remained committed to decarbonising – but at the lowest cost to the consumer.

She said that the government did not indulge in “crazes” for a particular technology, but instead wanted a “diverse energy mix”.

Alistair Phillips-Davies, chairman of utility SSE, and Kevin McCullough of Calon Energy, which operates combined-cycle gas plants in England and Wales, both disagreed that there had been a government U-turn on renewables.

And Tim Rotheray of The Association for Decentralised Energy, while agreeing that the speed of the subsidies cuts had “made everyone nervous”, stated that “there has been a sense of entitlement among some in the renewables industry”.

“They say: ‘You can’t do this to me because I’m green’. They say, ‘Please can I have my subsidy back because I’m wonderful’, instead of saying, ‘Can I have my subsidy back because it’s really important to help beat fuel poverty’.”

This view of entitlement was amplified by Angela Knight, former chief of Energy UK, the trade body that represents Britain’s major utilities.

She said that anybody surprised by the government’s action on renewables subsidies “should have read the Tory manifesto” before the General Election. She explained that the manifesto contained two pages on energy in which the Conservative Party outlined exactly what it has subsequently done in recent months.

And she added: “If you rely on government subsidies, you are in the hands of governments. You cannot assume you have a God-given right to a subsidy – you have to get a grip on that.”

She said that for renewable subsidies “the writing was on the wall a long time before the election. And picking up a bucket of sympathy and pouring it all over the place isn’t going to help.”

Knight’s successor at EnergyUK Lawrence Slade told the audience that “what we have lost since the General Election is policy certainty. We need transparency; we need timetables. Post 2020 there is tremendous uncertainty.”

Joan McNaughton of the World Energy Council agreed that “the state of the industry is bound up with policy, so there is uncertainty. We need clarity and the last thing we need is a fundamental reset of the EMR [Electricity Market Reform].

She said that “politicians under-estimate how their policies affect the perception of risk”. Angela Knight, former chief of Energy UK

And she said that the UK should have taken the same approach as Germany on ending subsidies, where support was cut but with a long lead-time and with much advance notice. “It’s a matter of regret that we didn’t so it that way.”

But the German Energiewende got short shrift from Angela Knight. “Germany’s energy policy is barking [mad] – they have blown holes through their commercial energy companies.

“Germany may be a poster child for the green lobby but it is not a poster child for a common sense and a practical approach to industry. You can’t apply a heart-rending approach to a major industry.”

She said that “energy and climate change are not the same thing – they should be separated. Energy has to be a practical policy – it cannot be an emotional policy, and climate change is an emotional policy. It will lead to the wrong outcomes.”

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