The Impact of a Premature End to Subsidies for New Onshore Wind Projects in the UK

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As part of the UK’s EU obligations, a national target is in place for renewable energy sources to account for 15% of gross energy consumption by 2020. In order to achieve these renewable energy targets, the government started promoting renewable energy sources through a significant amount of financial support in the form of subsidies, active research and development, government-sponsored loans, and tax allowances.

The renewable power market is led by the wind power market, with a cumulative installed capacity of 13,135 Megawatts (MW) in 2014, up from 493 MW in 2001 at a Compound Annual Growth Rate (CAGR) of 28.7%. To put this into perspective, the second-leading renewable source in 2014 was solar PV power, with a cumulative installed capacity of only 5,378 MW. The onshore wind power market grew from 490 MW in 2001 to 8,634 MW in 2014 at a CAGR of 24.7%, giving it the largest share of installed renewable capacity in 2014. Although offshore capacity is smaller, it saw huge growth from 4 MW in 2001 to 4,501 MW in 2014 at a CAGR of 72.4%.

The new Conservative-majority government intends to end subsidies for new onshore wind farms and shift the power to grant planning consent for large-scale projects to local authorities in England and Wales, starting on April 1, 2016, which is a year earlier than originally planned. According to the new Energy Bill, the approval of the Energy Secretary will no longer be required for the construction of all onshore wind farms, irrespective of size, but will rest with local authorities.

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