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18 | 13TH - 19TH NOVEMBER 2015 | UTILITY WEEK Finance & Investment Analysis T he reverberations of the government's withdrawal of support for large and small-scale renewables projects will be "felt far and wide", according to Gordon Edge, director of policy at Renewable UK. Edge tells Utility Week an estimated 7GW of onshore wind generation is in danger of being lost because of changes in government policy, which include potentially removing onshore wind from the next contracts for difference round. "These projects represent £9.8 billion of investment across the whole supply chain," he says. "It's not just renew- able energy developers that will be missing out on this economic activity." Citizens Advice warns that plans to block subsidies for onshore windfarms, in par- ticular, could cost energy customers at least £500 million through increased energy bills. The UK could lose large-scale projects and the backing of institutional investors. And even low-hanging fruit that might have contributed to a step-change in the UK energy market could be lost as water com- panies scale back their smaller-scale invest- ment plans. As energy-intensive users, water companies are well placed to reap the finan- cial benefits of on-site generation. But this reservoir of potential could now be lost. United Utilities has plans to invest £100 million in 100MW of solar capacity. How- ever, the firm says more than half of this will be heavily affected if the subsidy cuts are as harsh as planned. South West Water has revealed that pro- posed cuts to the feed-in tariff (FIT) will put "significant pressure" on its renew- able energy investment plans. Affinity Water, too, tells Utility Week it has been forced to shelve plans to install solar for a second time because of proposed cuts. Other firms such as Sutton and East Surrey Water, Severn Trent Water and Northern Ireland Water have been forced to re-evaluate renewables plans. United Utilities Neil Gillespie, director of energy strategy at United Utilities (UU), says the company plans to roll out 100MW of solar capacity. However, only 40MW of this will be devel- oped in time to avoid the subsidy cut, put- ting the remaining 60MW of its £100 million solar investment programme under threat. As part of its strategy, UU plans to invest £3.5 million in what will be Europe's largest floating solar power development – a 3MW project that is expected to meet a third of the energy needs of the water treatment works. The company had planned to develop a sec- ond floating solar project in Lancaster, but Gillespie says it is "doubtful" whether this will go ahead if the subsidy cuts are as exten- sive as planned. South West Water Wind, solar and hydro account for £11 mil- lion of the total £18 million investment planned by South West Water (SWW). How- ever, the firm has warned that the proposed closure of the FIT to new applicants by Janu- ary 2016, or a cap on new FIT expenditure, would put significant pressure on its future investment plans. SWW has installed solar arrays at 35 of its operational sites, totalling 2MW of capacity. It has one 100kW wind turbine at its Low- ermoor water treatment works in Cornwall, generating around 60 per cent of the site's power needs, and is "progressing its plans" to install a further seven small and medium- scale turbines across the region. It has also invested in developing hydro-electric schemes at the Colliford and Avon dams. Affinity Water Affinity Water has had to abandon its solar plans for a second time because of the threat of subsidy cuts, but expects to invest in solar when "reduced capital costs negate the requirement for subsidies". The company is "keen" to invest in renew- able energy to help it limit its carbon foot- print where there are opportunities to do so. "We have considered all forms of renew- able energy and energy reduction opportuni- ties across our sites," a spokesperson for the firm tells Utility Week. "However, due to our geography, we have very limited options for hydro turbine and onshore wind turbines." Affinity Water developed a project in 2011 to install 50kW solar across ten of its pump- ing stations, but had to scrap plans aer external funding was withdrawn following changes in government policy. Severn Trent Water Severn Trent Water (ST Water) is "working hard" to install ground-mounted solar at 50 of its operational sites before subsidy cuts come into effect in April next year. The water company said it would develop its plan for further solar power when the impact of any tariff reductions on market and material costs "becomes clear". ST Water has installed solar panels at its Coventry headquarters and its office building in Shelton, and is assessing site capabilities to develop more large-scale solar installations to power its treatment works. The firm has four wind turbines at its Derby, Newthorpe and Wanlip sewage treatment sites, produc- ing 20,000MWh of electricity a year. The power is exported to the National Grid, but ST Water said future turbines will power its own sites. It is also installing two small tur- bines at Lichfield and Stoke Bardolph. Northern Ireland Water Over the course of this financial year, NI Water is investing around £800,000 in solar energy to install some 600kW across 20 sites. It has no plans to invest in solar or wind and is "considering opportunities" to invest on an annual basis, taking into account avail- able subsidies and capital. NI Water has planned investment in 600kW of hydro generation during the cur- rent price control period (2015/21). However, the plans are being developed and will "take available subsidies into account, alongside available incentives". Sutton and East Surrey Water Sutton and East Surrey Water says its renew- ables investment is "opportunistic" and would amount to 100-200kW of installed solar with an investment of £100,000- £200,000. However, this is now unlikely to be installed aer the government "signalled its intention" to remove the FIT levy. Untapped potential The government's proposed cuts to subsidies could scupper plans for millions of pounds' worth of investment in renewables in the water sector. Lois Vallely investigates.