Onshore wind investors have been put off by recently-announced governmental cuts to onshore wind subsidies.
This, according to new research from advisory firm EY (Ernst & Young), commissioned by Scottish Renewables, the trade body for renewable energy in Scotland, which was revealed on Sunday.
According to Scottish Renewables, the recent decisions by the UK Government to end financial subsidies to the UK’s renewable energy industry — including onshore wind development — is “having a significant impact on investor confidence and their ability to lend to onshore wind farm developers.” Specifically, more than half of the lenders who responded to the survey conducted by EY — which asked a sample of active onshore wind investors about their current willingness to invest in the UK onshore wind industry — replied that they were not currently prepared to lend until the UK Energy Bill received Royal Assent — which is not expected until next year. The respondents referenced the current political and regulatory risk surrounding the country’s Renewable Obligation (RO) scheme, as well as the lack of guidance on the process and timing of the Energy Bill’s amendment through Parliament.
“The results of the survey indicate that raising project finance for UK onshore wind RO projects has become more complex, more expensive and increasingly difficult since the announcement of the early closure of the RO,” said Matthew Yard, Assistant Director at EY. “Those banks that have indicated they are considering lending to UK onshore wind RO projects are now seeking better terms and some form of mitigation against a situation with no RO revenue.
“As we move closer to the RO accreditation end date, the ongoing uncertainty makes it harder for projects and sponsors to raise senior finance.”
“The UK Government’s decision to remove financial support for some onshore wind farms a year earlier than planned has had a clear and negative impact on the ability of developers to attract finance to their projects,” said Michael Rieley, Senior Policy Manager for Scottish Renewables. “Our members have already expressed concern that they were entering an investment hiatus and this survey of lenders would indicate their suspicions are well founded.”
The UK Government has made moves to make several devastating changes to several of the current subsidy programs, which will affect not only onshore wind, but commercial and domestic solar as well.
“With the decision to end support a year earlier than planned, around two gigawatts of onshore wind projects in Scotland have been put at risk,” continued Mr Rieley. “These are projects that could bring around £3 billion pounds of investment and provide enough generation to meet the equivalent electricity demand of 1.2 million Scottish homes.”