The dispute centres on the legality of the basis on which the UK government operates its main financial mechanism for supporting low-carbon electricity generation.
Banks Renewables, part of northeast property and energy business The Banks Group, has lodged judicial review proceedings against the government’s support for offshore wind at the expense of onshore wind and other renewable energy technologies in its contracts for difference (CfD) auctions.
Banks believes that the exclusion of fully-consented onshore wind farms from the CfD process is against the public interest, prevents consumers from benefiting from the lower energy prices that would result from their inclusion and, from a legal perspective, does not comply with either EU or UK law.
The UK government excluded onshore wind from participating in the CfD Auction Round 2 in 2017 and has taken the same approach for the CfD Auction Round 3, which is now taking place.
Banks Renewables managing director Richard Dunkley said: “At a time when the UK government has said it wants to accelerate its decarbonisation objectives, it would seem illogical to most people that, for the last four years, it has itself significantly undermined the deployment of the lowest cost low carbon technology available – onshore wind.
“We have consistently expressed the view for many years that, as the most cost-effective method of low carbon electricity generation available, consented onshore wind farms should be included within the CfD auction process, and we have been in discussion with the UK government over this matter for several months.”
He continued: “It has so far indicated that it intends to continue with a policy which will result in slower decarbonisation and reduces competition in a way which leads to higher electricity bills for everybody, and we have therefore very reluctantly had to take this next step.
“We simply desire a level playing field, and believe consented onshore wind farms are legally entitled to participate in all CfD auction processes and to have an opportunity to access the aid necessary to construct consented sites.
“The exclusion of the onshore sector is clearly contrary to the open, transparent and non-discriminatory way in which the CfD scheme was expected to work. Allowing all technologies to participate in CfD auctions would allow the onshore and offshore wind industries to flourish, increase the rate at which the UK can decarbonise its power supply and achieve its climate change targets, and directly benefit consumers by reducing both electricity prices and the current 'green levy' on consumer bills.”
Banks Renewables is one of the leading independent owner/operators in the UK’s onshore wind sector, operating 10 wind farms around Scotland and northern England with an installed capacity of 224MW. It also has planning permission for two onshore wind farms in Scotland with a combined capacity of 150MW but these were not permitted to compete in the Round 3 CfD Auctions.
Richard Dunkley added: "In its Clean Growth Strategy, the UK government states that its policy towards reducing carbon emissions is guided by two principles – to ‘meet our domestic commitments at the lowest possible net cost’ and to ‘maximise the social and economic benefits for the UK’ – and indeed, the new prime minister has publicly committed to the UK leading the world in reducing carbon emissions.
“With onshore wind acknowledged as the most cost-effective method of green energy generation, its exclusion from the CfD auctions flies in the face of these principles and promises.
“UK government policy is expressly to make CfD support available to offshore wind but not to onshore wind, a position which it presently intends should endure. This policy will in particular frustrate the Scottish government's drive towards encouraging the further development of onshore wind projects within Scotland.
“The Banks Group is perhaps unique in having used revenues generated from coal mining operations to drive its successful diversification into the onshore wind sector over the last 15 years and fully supports a stable transition to a low carbon economy, but the progress of our contribution towards achieving this goal has been halted by the government’s position on onshore wind.
“This legal challenge is very much a last resort and we hope it will be resolved as quickly as possible, but we firmly believe that changes are required to ensure the UK government complies with its legal obligations and to end the needless prejudice within the CfD process against the most cost-effective and popular form of renewable energy generation.”