Government must bring clarity to renewable incentives

With the announcement that RWE is axing the £4bn Atlantic Array development it is time for the government to clear up confusion surrounding its support for major renewable energy schemes.

This latest news comes on the back of a Telegraph report that British Gas owner Centrica has announced it will consider pulling out the £2bn Race Bank wind farm, off the coast of Norfolk, unless subsidies from the Government are dramatically increased.

And here in Hull we have been waiting on a knife edge for months for Siemens to make a decision to locate its turbine manufacturing site on Alexandra Dock, with some sources blaming the lack of government incentives for the delay.

All this dithering is unnerving and sends out the wrong signals to developers who will ultimately bring these projects forward, and to companies like ours – Rix Sea Shuttle – which is a service provider to the industry.

But as the government prepares to shift from Renewable Obligation Certificates to Contracts for Difference (CfD), it has a chance to draw a line under the uncertainty and send a clear message to the industry.

Yet concerns remain that by reserving the right to alter the strike price (a measure of cost of investing in a particular low carbon technology) the government can control the levels of subsidy it pays to developers, making it hard from them to predict future revenue.

This, in turn, dampens investor confidence and without them, there is no industry.

So it is time for the government to bring clarity to the issue. When CfDs are phased in they must be clear on how much revenue large renewable projects will generate so renewed confidence can trickle down from investors to developers, to generators and suppliers.

It is, after all, in the government’s interest because if the current confusion continues to mire the industry, then targets of 15 per cent of the UK’s energy coming from renewables by 2020 and 30 per cent by 2030 will start to look very doubtful indeed.