Wind industry blown sideways but not off course
Tuesday, Dec 10, 2013
This week the UK Government announced a 5% cut in subsidies for onshore wind developments, heralded by many as a damaging blow to the industry. The debate has taken a new twist, however, in Scotland where landowners have been assured that demand for development on remote Scottish sites is unlikely to abate and that renting their land to developers will continue to be lucrative.
Speaking earlier today (6 December), Gordon Stewart, Head of Renewables at leading property management firm, Bidwells, said: “People reading media reports may be wondering this week what all the fuss was about after the UK government ahead of its Autumn Statement announced a drop in future support for onshore wind farms. Although not welcomed by the industry, this news cannot be regarded as the death knell of onshore wind farming, or anything like it.
“Overall the changes are likely to shift the pattern of demand rather than lead to its demise, making low lying southern marginal sites less viable and pushing developer interest back towards the more remote, exposed areas of the north. This will be welcomed in the Home Counties but will do nothing to ease demand for developing on ‘wild land’ here in Scotland.
“For landowners, hosting onshore wind projects will continue to be an attractive prospect. In the first instance, the government intends to cut subsidies by a mere 5% rather than the far more significant 50% drop in the support price for the solar panel industry it announced in 2011. The newly announced subsidised price of £95.00/MWh for onshore wind farms until March 2017, and even the £90.00/MWh subsidised price thereafter, are in fact substantially more than landowners currently accommodating wind farms operated by the main European utility companies receive today under the Renewable Obligation mechanism.
“Our experience to date indicates that where landowners are leasing their land to independent developers, they are achieving a much higher market rate for the electricity they are producing which is obviously crucial where the cost of rent is linked to the earnings of the generator.
“What this means for landowners is that renting land to onshore wind developers can still be financially beneficial provided they enter into a contact in the full knowledge of what that developer expects to be paid for the electricity produced. Bidwells has considerable experience in relation to these Power Purchase Agreements that govern the value of electricity from renewable developments and would welcome a call from anyone who has concerns about the income they are now receiving compared to what was forecast by developers when the initial approach was made.”