Power cash cuts fail to stir up storm

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THE company behind plans to deliver a £210m green energy plant in Yorkshire has welcomed new levels of Government subsidy for the renewable power industry, despite a fall in support for offshore wind.

German engineering giant Siemens is working with Associated British Ports to develop the Green Port Hull facility on Alexandra Dock, which would manufacture and assemble components for offshore wind turbines.

The Department for Energy and Climate Change (DECC) announced new rates of subsidies across the sector yesterday, which will see a five per cent cut in payments for offshore wind in 2015-16, and a 10 per cent fall in 2016-17.

A spokeswoman for Siemens said the firm welcomed the decision.

“We are pleased that the Government continues to support the investment in renewable energy.

“The sector has the potential to transform the UK economy and supply chain, enable innovation and create new jobs and skills,” she said.

“We are pleased to see that both onshore and offshore wind will receive an appropriate level of support to enable development needed to meet renewable targets, whilst at the same time continuing the cost reduction programme to make wind energy competitive with other sources.”

She said the announcement would “restore certainty” to the market for investment and new projects.

The proposed Siemens development is seen as a flagship project that could help place the Humber at the heart of the UK’s renewable energy industry.

Councillor Steve Bayes, Hull Council portfolio holder for economic regeneration and employment, said: “If it’s in line with their expectations that’s good news. I think everyone will be quite happy because it will fit in with their business model.”

Other Hull-based companies working in the sector expect to benefit too.

Engineering specialists the Spencer Group said the announcement meant it would now press ahead with plans to build Energy Works, a £100m-plus energy recovery plant on the east bank of the River Hull, which would power 25,000 homes.

If the plant is commissioned for operation by 2015 it means it will enjoy the same level of subsidy for 20 years.

Chief executive Charlie Spencer said: “The announcement gives the green light for us to forge on with an investment of more than £100m in the local economy, bringing a pioneering green energy plant to Hull and reinforcing the Humber as the UK’s renewables region.

“Hull has ambitions to become the UK’s Green City and Energy Works is the green city in action, providing an environment-friendly, local solution to waste issues in Hull and the East Riding.”

Neptune Renewable Energy, which is developing tidal power technology with a prototype already operating in the Humber, saw the number of Renewable Obligation Certificates (the subsidy) it qualifies for rise from two to five up to 2017 – a rise of 150 per cent.

Jack Hardisty, the firm’s technical director, said: “Naturally we fully endorse the new banding level.

“Our business model is based on commercial viability and this is a tremendous boost for us and for our investors.

“The UK has great potential in tidal stream energy and today’s announcement demonstrates that the Government recognises this.”

The department resisted calls for significant cuts to onshore wind subsidies, announcing a reduction of 10 per cent in payments for new farms.

Energy Secretary Ed Davey said the changes to subsidies for renewables would boost clean electricity while curbing the cost to consumers.

The moves could prompt investment of between £20bn-£25bn in the economy between 2013 and 2017, DECC claimed.

Mr Davey said: “Renewable energy will create a multi-billion-pound boom for the British economy, driving growth and supporting jobs across the country.

“The support we’re setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and show the key role of renewables for our energy security.

He added: “Because value for money is vital, we will bring forward more renewable electricity while reducing the impact on consumer bills between 2013 and 2015, saving £6 off household energy bills next year and £5 the year after.”

But the announcement also set out the Government’s backing for gas, including £500m tax breaks for shallow water gas fields to boost investment in economically-marginal gas fields.