Posted on: 27/10/2015
The House of Lords have knocked back the UK Government’s plans to end subsidies for new onshore wind farms a year earlier than planned.
Peers on Wednesday backed a Labour motion to delete the clause in the Energy Bill that would close the Renewables Obligation scheme in April 2016.
Baroness Worthington, the Shadow Energy and Climate Change Minister, argued that the Government had undermined its own argument that it was saving bill payers money because its impact assessment showed homes would save only 30p a year as a result of ending support for new onshore wind developments.
Further uncertainty for investors
The clause is expected to be revived when the bill returns to the Commons but the Government may have to make some concessions to ensure it passes on its next visit to the Lords.
Dr Gordon Edge, RenewableUK Director of Policy, said that the defeat could create further uncertainty for investors.
"What renewable energy developers urgently need from the Energy Bill is clarity, to minimise the impact of the changes on investor confidence.”
He said while he was concerned about the possibility for delay that the vote causes, he hoped the Lords debate gives the Government “pause for thought around some of the finer details of grace period eligibility”.
Luke Gabb, partner in the Energy and Natural Resource Sector at Bond Dickinson commented:
"Far from providing greater certainty for investors this turn of events creates further uncertainty for developers, and in the eyes of investors when they see reports of the vote referred to as a 'constitutional crisis'.
“The Government’s plan to end onshore wind subsidies next year must now be in doubt. It is unclear what will happen next, though it must be likely that Government will again table amendments to reinsert the subsidy cut at third reading, a date for which is still to be set. The final legislation and outcome could be delayed."