The Government’s consultation on allowing onshore wind and solar developers to compete again for subsidies while welcome, is only a step in the right direction. It is not the silver bullet in the provision of more onshore wind developments – there are a number of potential roadblocks that need to be overcome.

In England the situation for wind – not solar – is that projects must currently have community support to succeed, which has the potential to slow down or even stymie the consenting process. However, with a lack of projects since 2015 to test this potential roadblock, it will be interesting to see whether the climate crisis's rise up the agenda changes public perception of onshore wind developments. If the consultation is taken forward will any English onshore wind schemes start chasing Contracts for Difference (CfDs)?

However, the CfD auction process is likely to be highly competitive in England, Scotland and Wales. There is a significant number of projects across a range of technologies that will be competing for the same budget pot, including all those onshore wind projects that have stalled since the Government withdrew subsidies in 2016.

A number of these projects are likely to be uncompetitive in their present design due to high infrastructure costs. We expect larger turbine sizes will be required in order to become viable, which means a return to the planning process. This will be difficult in what is a narrow time frame for those eligible to bid into the next auction round proposed for 2021.

The Government-backed CfD is likely to increase the rate of deployment as the take up of merchant projects has been slow, though it is likely that prices realised at the 2021 auction will be below those achievable on a merchant basis. However, the certainty derived from a 15-year guarantee alongside the security of a strong covenant will give investors confidence to get projects out of the ground.

We expect further announcements in next week’s budget, particularly relating to the continuation of the Renewable Heat Incentive (RHI), but with an eye on COP26 later this year, national and devolved governments are expected to launch a number of new policies before the UN comes to Glasgow.

Planning applications for wind and solar projects dropped significantly following the 2015 government announcement on the reduction in the Feed in Tariff and early closure of the Renewable Obligation.

Further information

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