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News Release

London

Jones Lang LaSalle House View – The Banding Review Proposals


​The government today announced its decision on renewable energy subsidy levels up to 2017. The revised Renewables Obligation (RO) bandings are broadly in line with industry expectations in spite of pressure from the Treasury for greater cuts. In particular, the subsidy for onshore wind has been cut by 10% to 0.9 Renewables Obligation Certificates (ROCs), which has been greeted with cautious optimism by both investors and developers. However this win has come at a price with DECC conceding to a review in 2012/13 to reassess the economics of onshore wind and consider a lower level of subsidy for new projects commissioned after April 2014.

 

 
The continued uncertainty surrounding the new Energy Bill has prompted the government to suggest it will consult nearer the time on arrangements for the  closure in 2017 of the RO to new projects. 
 

 

Jones Lang LaSalle’s head of Renewable Energy Capital, Dane Wilkins, said:  “While the headline subsidy announcement is a positive signal, the combination of imminent further reviews of onshore wind tariffs, potential amendments to Electricity Market Reform (EMR) and timing of closure of the RO generates substantial regulatory uncertainty.”

 

 
Dane Wilkins added: “The fear here is of further deterioration in confidence in UK regulation culminating in further restrictions in availability of capital to fund schemes coming online post April 2014.  The industry needs a longer term view from government.”