Onshore wind changes deterring investment

New research has shown that investor confidence has been affected as a result of recent Government decisions. It is also affecting the ability to lend to onshore wind farm developers.

EY, on behalf of Scottish Renewables carried out a survey of major lenders to the renewable sector. This confirmed the industry’s concerns that banks are not willing to lend for such projects. Over 50% said they would not be willing to lend until the UK Energy Bill had received Royal Assent.

Michael Rieley, Senior Policy Manager for Scottish Renewables, the industry body for Scotland, said: “The UK Government’s decision to remove financial support for some onshore wind farms a year earlier than planned has had a clear and negative impact on the ability of developers to attract finance to their projects. Our members have already expressed concern that they were entering an investment hiatus and this survey of lenders would indicate their suspicions are well founded.” “With the decision to end support a year earlier than planned, around two gigawatts of onshore wind projects in Scotland have been put at risk. These are projects that could bring around £3 billion pounds of investment and provide enough generation to meet the equivalent electricity demand of 1.2 million Scottish homes. If we are to avoid losing the benefits of this scale of development in Scotland, the UK Government must allow those developers that have already made significant progress with their projects to continue them as part of the RO scheme.” Matthew Yard, Assistant Director at EY, added: “The results of the survey indicate that raising project finance for UK onshore wind RO projects has become more complex, more expensive and increasingly difficult since the announcement of the early closure of the RO. Those banks that have indicated they are considering lending to UK onshore wind RO projects are now seeking better terms and some form of mitigation against a situation with no RO revenue. As we move closer to the RO accreditation end date, the ongoing uncertainty makes it harder for projects and sponsors to raise senior finance”.