Biomass A Loser in Cuts to Renewable Energy Subsidies

By Katie Anderson on October 20th, 2011

Biomass looks to be one of the losers in the just announced cuts to UK renewable energy subsidies.

But the cuts, announced earlier today by the Department for Energy and Climate Change (DECC) are not as harsh as many industry insiders and green campaigners had initially feared.

Subsidies for numerous renewable technologies will be cut, with the biomass industry facing perhaps the biggest disappointment, as developers say the subsidies have been left at a level that will do nothing to encourage new biomass projects.

Energy generated from landfill gas will cease to receive any subsidies, while hydro power projects are set to receive half what they were originally.  Projects that produce energy from waste will have also have their subsidies slashed.

Wind energy has escaped quite lightly, with cuts to support for offshore wind farms delayed until 2015, and onshore wind farms to see their subsidies reduced gradually, by a maximum of 10%.

“Today’s announcement makes clear the Government’s commitment to supporting long-term investment in the UK’s renewables industries,” said Nick Clegg, the Deputy Prime Minister.

“Supporting clean, green, secure energy is the right thing to do for both the environment and the economy,” he added.

A review of renewable energy subsidies has been a long time coming. But it comes at a time when the solar industry is preparing for severe cuts to the feed-in tariff (Fit) scheme, which will see tariff levels for domestic installations reduced. Any reduction has the potential to ward off investors, which would cost thousands of industry related jobs.

Tidal and wave energy have come out of the review well, with the Government more than doubling aid under the banding review. Both sectors set to receive five renewable obligation certificates for every megawatt (MW) on smaller schemes, although installations above 30MW will only receive only two.

Some of the main changes to the Renewables Obligation include:

  • A proposed new band for biomass conversion.
  • Hydro power support to be halved.
  • Support for tidal stream and wave power to be more than doubled up to 5MW.
  • A cut in support for energy generated by anaerobic digestion from 2015/16.
  • Onshore wind support to be reduced from 2014/15.
  • Support for offshore wind will be increased.

With green taxes being held accountable by many for the high cost of energy bills – despite research indicating low-carbon subsidies making up just a small fraction of hikes in energy bills – there will be a consultation period which will run until early 2012, before the cuts come into effect.

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