The announcement of the new industrial strategy green paper is an exciting moment. The last few years have been defined by an almost total lack of joined-up thinking on energy policy and a bewildering raft of sudden policy announcements - including severe cuts to support for renewable energy - that have left little but uncertainty in their wake.
One of the strategy’s ten pillars commits to ‘delivering affordable energy and clean growth’. The government is setting out to ‘secure the economic benefits of the transition to a low-carbon economy’. Bundled into this are plans to back ultra-low emission vehicles, ‘smart’ and clean energy.
So far, so good. But this is politics.
Look a little closer. There is no mention of our two cheapest low carbon energy sources: onshore wind and solar PV, even as both continue to tumble in price. Onshore wind already rivals gas as the cheapest new energy source of any kind - and the government’s own projections show it undercutting new gas as early as next year (latest 2020). Solar is not far behind.
Yet, it is almost impossible to build new generation capacity - fossil, nuclear or renewable - without some public guarantee. For gas this is provided through the capacity market auctions (the last of which was in early December). In contrast, the rug has been pulled out from under onshore wind.
Since the unexpected election of a Conservative majority government in 2015 financial guarantees available to low carbon electricity generators have been denied to onshore wind - complemented by the erection of unique planning barriers. It is not being allowed to compete, period.
Relegating the cheapest low carbon energy source to the bench makes decarbonising our energy supply more expensive. Citizens Advice found that for each financial support auction run without onshore wind £500m would be added to the public bill over 15 years (not including eye-watering sums being spent on Hinkley). With auctions running roughly annually it’s not hard to see that cost reaching the billions. In part that number is so high because of a little advertised fact: subsidy auction rules require that onshore wind cannot alone be excluded. Instead, auctions for more ‘mature’ renewables must be cancelled altogether to deny onshore wind access. But this blocks bidding rights to the next cheapest low carbon energy source - solar PV - too. Hobbling onshore wind means taking commercial scale solar down with it - inflating the cost of meeting our emissions targets.
Overpaying to decarbonise our economy makes no fiscal sense, and breaks another Conservative manifesto promise: to transition to low carbon at lowest cost. Worse, it pushes up costs for businesses - particularly large industrial users of electricity. By equivocating about the role of ‘green subsidies’ in energy costs - all the while sidelining the cheapest renewables - the government risks creating a self-fulfilling prophecy that could erode public consent for the huge investment needed to modernise our energy system.
The time has come to face facts: an industrial strategy for a competitive and low carbon Britain that excludes our cheapest renewables just isn’t very strategic.
So where next? The 2015 manifesto commitment has its roots in a letter from 100 MPs to David Cameron in 2012 protesting onshore wind growth. Though sources maintain that many of them signed it casually, without much knowledge of the issue, nevertheless there are local dimensions the government is wary of.
But, really, they needn’t be.
Government polling shows onshore wind is popular nationally - at 71% (the highest score yet) - while our research finds two-thirds support in rural areas (where people are most likely to live next to turbines).Yes, there will be always be vocal local opposition - but the government found just 2% strongly opposed in national figures.
Building an active constituency for onshore wind isn’t rocket science. But like rockets, it needs oxygen. Community wind projects, where locals can directly participate and benefit, transform turbines from perceived corporate impositions to community assets. Recent Cooperative Energy polling found 65% of 2015 Conservative voters would be likely to support local community owned wind turbines. Combining this approach with existing industry standards for commercial developments that offer direct benefits to communities (through anything from a local share offer to energy bill reductions) is a powerful approach to embedding local benefits and cementing local enthusiasm.
For this - as a first step - the planning barriers that block community-led wind projects must come down. This must be met with a re-doubled approach to enable a route to market for onshore wind (and thus solar PV). The government doesn’t have to choose between its manifesto pledges to halt subsidised onshore wind and to decarbonise at lowest cost. It can proactively support direct local supply projects, such as Energy Local, to create local energy markets that lower household bills while increasing payments to renewable generators. And it can provide long term contracts for onshore wind at or below the level needed to bring forward new gas. Under any reasonable analysis this is de-risking, not subsidising.
The government is right to identify affordable energy and clean growth at the core of our new industrial journey. There is simply no other way. But until it summons the leadership to bring our cheapest renewables in from the cold it will forever be trying, wastefully, to square this circle right at its heart.
Max Wakefield is lead campaigner on 10:10’s Blown Away campaign to stand up for onshore wind. Sign our petition before the spring budget to bring our cheapest renewables in from the cold.
The views expressed in the article are those of the author, not necessarily of Bright Blue