Green boom? No, UK government doublespeak

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Adam Barber
April 25, 2014
This content is from our archive. Some formatting or links may be broken.
This content is from our archive. Some formatting or links may be broken.
Green boom? No, UK government doublespeak

It has been a week of renewable energy doublespeak from the UK government.

If you believe energy and climate change secretary Ed Davey we are now in a “green energy investment boom”. Davey, a Liberal Democrat, said this on Wednesday when revealing eight projects to get support from the Contracts for Difference (CfD) regime. These eight include five offshore wind farms.

But yesterday energy minister Michael Fallon said that the Conservative Party would not subsidise any new onshore wind farms if the party wins the 2015 general election; and came out publicly in support of shale gas and fracking.

Investors would be forgiven for getting confused by the mixed messages. The government is talking about a green investment boom, but then it backs gas over onshore wind.

So what is really going on?

The big myth is that the CfD announcement marks the start of a UK green energy boom. It doesn’t.

The government has confirmed five offshore wind farms that will get subsidies if they happen: Dong Energy’s 1.2GW Hornsea 1, 660MW Walney, and 258MW Burbo Bank extension; SSE’s 664MW Beatrice; and Statoil and Statkraft’s 402MW Dudgeon.

Naturally it is good to see the government providing support for projects through its CfD regime, but the CfD regime does not mean these projects will definitely happen. It just gives the developers a little more certainty when making decisions about whether to proceed.

For example, SSE is set to finally decide on Beatrice in 2016.

If anything, the CfD regime just reinforces what the government is already doing. And remember, it is no accident that CfD strike prices are set at levels that favour offshore schemes over onshore.

The Conservatives are still planning a moratorium on planning permission and subsidies for new onshore wind farms if they win the 2015 general election.

The final say on planning permission for new onshore wind farms is still in the control of communities secretary Eric Pickles until then, too.

And the carbon price floor remains frozen, as announced by chancellor George Osborne in his Budget in March. This will slow the UK’s transition to new sources of renewable energy.

So with that in mind, here's what investors should take from all this double talk.

It is bad news for UK onshore wind investors. The CfD announcement made no mention of this market, which reinforces government apathy towards its future development and growth.

However, it is good for offshore investment. Put bluntly, it demonstrates exactly how UK policymakers want to grow this sector - and how the support mechanisms will pan out.

And for the UK as a whole?

This laser focus on offshore wind reflects a high-risk approach. Yes, it could help UK firms to export products, skills and services overseas. However, global growth in offshore wind is far from assured.

And in a market that continues to evolve and adapt, it's an approach that leaves little room for future manoeuvre.

It has been a week of renewable energy doublespeak from the UK government.

If you believe energy and climate change secretary Ed Davey we are now in a “green energy investment boom”. Davey, a Liberal Democrat, said this on Wednesday when revealing eight projects to get support from the Contracts for Difference (CfD) regime. These eight include five offshore wind farms.

But yesterday energy minister Michael Fallon said that the Conservative Party would not subsidise any new onshore wind farms if the party wins the 2015 general election; and came out publicly in support of shale gas and fracking.

Investors would be forgiven for getting confused by the mixed messages. The government is talking about a green investment boom, but then it backs gas over onshore wind.

So what is really going on?

The big myth is that the CfD announcement marks the start of a UK green energy boom. It doesn’t.

The government has confirmed five offshore wind farms that will get subsidies if they happen: Dong Energy’s 1.2GW Hornsea 1, 660MW Walney, and 258MW Burbo Bank extension; SSE’s 664MW Beatrice; and Statoil and Statkraft’s 402MW Dudgeon.

Naturally it is good to see the government providing support for projects through its CfD regime, but the CfD regime does not mean these projects will definitely happen. It just gives the developers a little more certainty when making decisions about whether to proceed.

For example, SSE is set to finally decide on Beatrice in 2016.

If anything, the CfD regime just reinforces what the government is already doing. And remember, it is no accident that CfD strike prices are set at levels that favour offshore schemes over onshore.

The Conservatives are still planning a moratorium on planning permission and subsidies for new onshore wind farms if they win the 2015 general election.

The final say on planning permission for new onshore wind farms is still in the control of communities secretary Eric Pickles until then, too.

And the carbon price floor remains frozen, as announced by chancellor George Osborne in his Budget in March. This will slow the UK’s transition to new sources of renewable energy.

So with that in mind, here's what investors should take from all this double talk.

It is bad news for UK onshore wind investors. The CfD announcement made no mention of this market, which reinforces government apathy towards its future development and growth.

However, it is good for offshore investment. Put bluntly, it demonstrates exactly how UK policymakers want to grow this sector - and how the support mechanisms will pan out.

And for the UK as a whole?

This laser focus on offshore wind reflects a high-risk approach. Yes, it could help UK firms to export products, skills and services overseas. However, global growth in offshore wind is far from assured.

And in a market that continues to evolve and adapt, it's an approach that leaves little room for future manoeuvre.

It has been a week of renewable energy doublespeak from the UK government.

If you believe energy and climate change secretary Ed Davey we are now in a “green energy investment boom”. Davey, a Liberal Democrat, said this on Wednesday when revealing eight projects to get support from the Contracts for Difference (CfD) regime. These eight include five offshore wind farms.

But yesterday energy minister Michael Fallon said that the Conservative Party would not subsidise any new onshore wind farms if the party wins the 2015 general election; and came out publicly in support of shale gas and fracking.

Investors would be forgiven for getting confused by the mixed messages. The government is talking about a green investment boom, but then it backs gas over onshore wind.

So what is really going on?

The big myth is that the CfD announcement marks the start of a UK green energy boom. It doesn’t.

The government has confirmed five offshore wind farms that will get subsidies if they happen: Dong Energy’s 1.2GW Hornsea 1, 660MW Walney, and 258MW Burbo Bank extension; SSE’s 664MW Beatrice; and Statoil and Statkraft’s 402MW Dudgeon.

Naturally it is good to see the government providing support for projects through its CfD regime, but the CfD regime does not mean these projects will definitely happen. It just gives the developers a little more certainty when making decisions about whether to proceed.

For example, SSE is set to finally decide on Beatrice in 2016.

If anything, the CfD regime just reinforces what the government is already doing. And remember, it is no accident that CfD strike prices are set at levels that favour offshore schemes over onshore.

The Conservatives are still planning a moratorium on planning permission and subsidies for new onshore wind farms if they win the 2015 general election.

The final say on planning permission for new onshore wind farms is still in the control of communities secretary Eric Pickles until then, too.

And the carbon price floor remains frozen, as announced by chancellor George Osborne in his Budget in March. This will slow the UK’s transition to new sources of renewable energy.

So with that in mind, here's what investors should take from all this double talk.

It is bad news for UK onshore wind investors. The CfD announcement made no mention of this market, which reinforces government apathy towards its future development and growth.

However, it is good for offshore investment. Put bluntly, it demonstrates exactly how UK policymakers want to grow this sector - and how the support mechanisms will pan out.

And for the UK as a whole?

This laser focus on offshore wind reflects a high-risk approach. Yes, it could help UK firms to export products, skills and services overseas. However, global growth in offshore wind is far from assured.

And in a market that continues to evolve and adapt, it's an approach that leaves little room for future manoeuvre.

It has been a week of renewable energy doublespeak from the UK government.

If you believe energy and climate change secretary Ed Davey we are now in a “green energy investment boom”. Davey, a Liberal Democrat, said this on Wednesday when revealing eight projects to get support from the Contracts for Difference (CfD) regime. These eight include five offshore wind farms.

But yesterday energy minister Michael Fallon said that the Conservative Party would not subsidise any new onshore wind farms if the party wins the 2015 general election; and came out publicly in support of shale gas and fracking.

Investors would be forgiven for getting confused by the mixed messages. The government is talking about a green investment boom, but then it backs gas over onshore wind.

So what is really going on?

The big myth is that the CfD announcement marks the start of a UK green energy boom. It doesn’t.

The government has confirmed five offshore wind farms that will get subsidies if they happen: Dong Energy’s 1.2GW Hornsea 1, 660MW Walney, and 258MW Burbo Bank extension; SSE’s 664MW Beatrice; and Statoil and Statkraft’s 402MW Dudgeon.

Naturally it is good to see the government providing support for projects through its CfD regime, but the CfD regime does not mean these projects will definitely happen. It just gives the developers a little more certainty when making decisions about whether to proceed.

For example, SSE is set to finally decide on Beatrice in 2016.

If anything, the CfD regime just reinforces what the government is already doing. And remember, it is no accident that CfD strike prices are set at levels that favour offshore schemes over onshore.

The Conservatives are still planning a moratorium on planning permission and subsidies for new onshore wind farms if they win the 2015 general election.

The final say on planning permission for new onshore wind farms is still in the control of communities secretary Eric Pickles until then, too.

And the carbon price floor remains frozen, as announced by chancellor George Osborne in his Budget in March. This will slow the UK’s transition to new sources of renewable energy.

So with that in mind, here's what investors should take from all this double talk.

It is bad news for UK onshore wind investors. The CfD announcement made no mention of this market, which reinforces government apathy towards its future development and growth.

However, it is good for offshore investment. Put bluntly, it demonstrates exactly how UK policymakers want to grow this sector - and how the support mechanisms will pan out.

And for the UK as a whole?

This laser focus on offshore wind reflects a high-risk approach. Yes, it could help UK firms to export products, skills and services overseas. However, global growth in offshore wind is far from assured.

And in a market that continues to evolve and adapt, it's an approach that leaves little room for future manoeuvre.

It has been a week of renewable energy doublespeak from the UK government.

If you believe energy and climate change secretary Ed Davey we are now in a “green energy investment boom”. Davey, a Liberal Democrat, said this on Wednesday when revealing eight projects to get support from the Contracts for Difference (CfD) regime. These eight include five offshore wind farms.

But yesterday energy minister Michael Fallon said that the Conservative Party would not subsidise any new onshore wind farms if the party wins the 2015 general election; and came out publicly in support of shale gas and fracking.

Investors would be forgiven for getting confused by the mixed messages. The government is talking about a green investment boom, but then it backs gas over onshore wind.

So what is really going on?

The big myth is that the CfD announcement marks the start of a UK green energy boom. It doesn’t.

The government has confirmed five offshore wind farms that will get subsidies if they happen: Dong Energy’s 1.2GW Hornsea 1, 660MW Walney, and 258MW Burbo Bank extension; SSE’s 664MW Beatrice; and Statoil and Statkraft’s 402MW Dudgeon.

Naturally it is good to see the government providing support for projects through its CfD regime, but the CfD regime does not mean these projects will definitely happen. It just gives the developers a little more certainty when making decisions about whether to proceed.

For example, SSE is set to finally decide on Beatrice in 2016.

If anything, the CfD regime just reinforces what the government is already doing. And remember, it is no accident that CfD strike prices are set at levels that favour offshore schemes over onshore.

The Conservatives are still planning a moratorium on planning permission and subsidies for new onshore wind farms if they win the 2015 general election.

The final say on planning permission for new onshore wind farms is still in the control of communities secretary Eric Pickles until then, too.

And the carbon price floor remains frozen, as announced by chancellor George Osborne in his Budget in March. This will slow the UK’s transition to new sources of renewable energy.

So with that in mind, here's what investors should take from all this double talk.

It is bad news for UK onshore wind investors. The CfD announcement made no mention of this market, which reinforces government apathy towards its future development and growth.

However, it is good for offshore investment. Put bluntly, it demonstrates exactly how UK policymakers want to grow this sector - and how the support mechanisms will pan out.

And for the UK as a whole?

This laser focus on offshore wind reflects a high-risk approach. Yes, it could help UK firms to export products, skills and services overseas. However, global growth in offshore wind is far from assured.

And in a market that continues to evolve and adapt, it's an approach that leaves little room for future manoeuvre.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.