Government Reduces Onshore Wind Subsidies

The UK Government today published revised draft strike prices for Contracts for Difference, the subsidy regime that will replace the Renewables Obligation (RO) with effect from 31 March 2017. And the news is not good for onshore wind developers.

With effect from the middle of 2014 transition arrangements will apply, where generators can opt to accredit under the existing RO regime or, alternatively, apply for Contracts for Difference. For onshore wind developers, with projects due to commission before 31 March 2017, that choice may be influenced by the further degradation of the strike price announced today.

The strike price in Contracts for Difference is the benchmark that governs how much of a subsidy is paid to generators, where the market price for electricity (the reference price) is less than the benchmark – and conversely how much is repaid by generators if the reference price exceeds the strike price. If it is set too high the expectation is that it will