The UK government announced Wednesday it would cut subsidies for onshore wind by 10%, which is less than the 25% reduction some members of parliament wanted.
But it said the cut could be increased in 2014.
The Department of Energy and Climate Change said in a statement that from 2013 to 2017, onshore wind would get 0.9 Renewable Obligation Certificates per MWh, down from 1 ROC/MWh previously.
"This level is guaranteed until at least 2014, but could change after then if there is a significant change in generation costs," DECC said.
The department will later this year call for evidence on onshore wind costs and report back early 2013. If there is a significant change in costs, the government will launch an immediate review of ROC levels with new arrangements to come into effect from April 2014.
DECC, under Liberal Democrat Minister Ed Davey, had been arguing for only a 10% cut to subsidies. But some backbench Conservative members of parliament, and Conservative Finance Minister George Osborne, had been pushing for 25%.
While the 10% cut looks like a victory for Davey, it is not guaranteed to last long. In addition, earlier this week, local media reported a leaked letter from Osborne to Davey suggesting that Osborne was prepared to settle for a 10% cut in return for Davey agreeing to a clear commitment on the role of natural gas in the power generation mix to at least 2030.
MARINE BOOST
Support for certain marine energy technologies will rise from 2 ROCs/MWh to 5 ROCs/MWh, the government said, subject to a 30 MW limit for each generating station.
There will also be a new band to support existing coal plants which convert to using biomass fuels, welcomed by the UK's Drax Group, which is planning to do so.
There will be no immediate cut in support for large-scale solar plants, but there will be consultation later this year on reduced support levels as the cost of solar power has been falling.
The government said its package could bring 79 TWh/year of renewable electricity by 2017, taking the country three quarters of the way to the 108 TWh/year required to meet the UK's 2020 renewable energy target agreed with the European Union.
WIND WELCOME
Industry association RenewableUK broadly welcomed the move on onshore wind, and said that the onshore wind sector could grow to employ over 12,000 people by 2020, adding over a billion pounds to the UK's economy every year.
But it said even the 10% cut in ROCs would mean a loss of around GBP2 billion investment out of a potential GBP20 billion, with 1,300 fewer jobs.
It expressed concern over the upcoming review, which could deter investors.
"Any element of uncertainty created by such a review must be reduced to a minimum if the onshore sector is to grow as fast as the government wishes," RenewableUK said.
"We have been given clarity on funding for April 2013 to April 2014, but this is a relatively short timeframe," said RenewableUK CEO Maria McCaffery. "Investors need long term certainty, and ideally we would have welcomed a little more of that in today's announcement."
Offshore wind will get 2 ROCs/MWh until April 2015, then 1.9 for a year, with a further cut to 1.8 ROCs/MWh from April 2016.
RenewableUK said this was a "carefully-phased reduction in financial support for offshore wind over a long timeframe" that showed the government was "committed to the development of the UK's world-leading offshore sector as a key part of our energy mix."
