United Kingdom

United Kingdom

Ecotricity opts against new UK subsidy regime

UK: British wind developer and utility Ecotricity has shunned the UK government's new subsidy regime in favour of the old one for a planned 54MW project.

Ecotricity operates a number of wind farms, including the 16MW Fen Farm
Ecotricity operates a number of wind farms, including the 16MW Fen Farm

The company said it will register the Heckington Fen project in east England under the current renewables obligation (RO) scheme rather than the newly launched contract for difference (CfD) programme.

This announcement comes on the same day the government launched a further round of consultation on the implementation of the subsidies.

As the authorities finalise the details of the new regime, the industry is being asked for its input on the process by which the government can direct the CfD counter-party (the state-owned company that pays the subsidy) to offer a CfD to a developer outside of the normal parameters.

Ecotricity founder Dale Vince is not convinced the CfD system is an improvement on the existing support mechanism, commenting: "Contracts for difference comes with new risks and uncertainties, which it are difficult to quantify. It's not just because it's new, it's a very different approach, and it introduces a lot of new risk for projects."

Under the CfD system, generators will receive a top-up payment when the wholesale electricity price is below a pre-agreed strike price, and pay money back if the price rises above it.

Developers can now apply to be considered under the new subsidy regime, but they can also qualify under the RO scheme until March 2018 after the government extended the deadline by a year.

"While we will have to deal with CfDs eventually — as the only game in town — for now we have the choice, and the RO is a far simpler and less risky process," said Vince.

The wind farm was granted construction consent a year ago, and the company said it expects to complete it before the deadline for RO qualification.

The government announced in December that it would cut support for onshore wind under the CfD regime, with the strike price falling £5/MWh (EUR 6/MWh) to £90/MWh from 2017.

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