Banks Renewables is behind the legal challenge against the government’s ongoing third allocation round of the Contracts for Difference (CfD) scheme.
The renewable energy company, part of the Banks Group, has revealed it is challenging the legality of the basis on which the government operates its main mechanism for supporting low carbon electricity generation.
Under the CfD scheme, technologies such as offshore wind and biomass with combined heat and power (CHP) can bid for contracts in the auctions.
Banks Renewables has launched judicial review proceedings against what it says is the government’s discrimination of onshore wind and other renewable energy technologies in favour of offshore wind in its CfD auctions.
It claims the exclusion of full consented onshore wind farms from the scheme is against the public interest, prevents consumers from benefitting from lower energy prices and alleges it “does not comply with either EU or UK law”.
The government excluded onshore wind from participating in the second round of the CfD auction and is doing so again in the third round, which is current ongoing.
National Grid contacted qualifying applications to inform them of the legal challenge and has extended the bidding window until 29th August 2019.
The scheme is expected to award contracts to support up to 6GW of capacity – enough to power around 350,000 homes a year.
Banks Renewables said it has consistently expressed the view that consented onshore wind farms should be included within the CfD auction process and has been discussing it with the government for “several months”.
It believes allowing all technologies to participate in the auctions would allow the onshore and offshore wind sectors to flourish, increase the rate at which the UK can decarbonise its power supply and achieve its climate change targets while directly benefitting consumers with lower electricity prices and a reduction on the green levies on bills.
Managing Director Richard Dunkely added: “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.
“It has so far indicated that it intends to continue with a policy which will result in slower decarbonisation and reduced 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.”
Banks Renewables, which currently operates 10 wind farms across Scotland and northern England, with a total installed capacity of 224MW, said the legal challenge is “very much a last resort”.
Earlier this week, BEIS said it runs the scheme “lawfully” and will be contesting the claim.
A spokesperson added: “Our Contracts for Difference scheme has supported the investment of £490m annually in renewable technologies and more than 50% of our energy now comes from low carbon sources – a vital part of our move to becoming a net zero emissions economy by 2050.”
The news follows fresh legal action launched in March 2019 against the government’s decision to keep the “unlawful” Capacity Market subsidy scheme open after the EU Court of Justice ruled against it last November and the launch of the European Commission’s investigation into the scheme.