United Kingdom

United Kingdom

EU takes UK offshore wind local content fight to WTO

EU opens World Trade Organisation dispute over UK’s 'discriminatory' local content requirement for offshore wind

European Commission President Ursula von der Leyen
European Commission President Ursula von der Leyen

The EU has filed a complaint against the UK at the World Trade Organisation (WTO), claiming its local content requirements for large renewable energy projects are discriminatory.

Its complaint refers to the so-called supply chain plans (SCPs) required by the UK from companies who bid for contracts for difference (CfDs) breach WTO rules. This complaint is the first step in WTO dispute proceedings. 

The UK government reportedly stated that it would contest the EU’s challenge.

Local content complaint

The UK requires SCPs, which set out how the bidder will ensure local UK content, for all renewable energy projects over 300MW. Unless the plans pass scrutiny from the department for business, energy and industrial strategy (BEIS), the developer is not eligible to bid for a CFD. 

The measure mostly affects offshore wind projects, which tend to have large capacities. 

The EU argues that because the SCP scheme favours UK content it “violates the WTO’s core tenet that imports must be able to compete on an equal footing with domestic products.” It added that the UK’s “discriminatory trade practices” undermine its €36 billion wind energy sector, which provides 500,000 jobs.

The EU stated that it had previously raised its concerns with the UK on several occasions, but to no avail. If the two sides cannot come to an agreement within 60 days, the WTO may set up a panel to arbitrate. That process could take a year.

The restriction represented by the SCP process was made clearer in February, when the UK tightened requirements.

The UK stipulated that all developers would have to score higher in BEIS’s assessment where currently “most SCPs only just pass,” complained about developers who “change their size by a few MW in order to avoid the requirement” and announced it would extend the requirement to floating wind projects if they were bigger than 300MW.

But the UK believes other countries place similar requirements on projects to use national suppliers.

According to UK newspaper the Financial Times, the government stated: “The UK abides by WTO law and will rigorously contest the EU’s challenge.” Windpower Monthly has contacted BEIS for comment.

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