Britain to scrap new onshore wind subsidies next year

LONDON (Reuters) - Britain will scrap all new subsidies for onshore wind farms from April next year when it closes a renewable support scheme, the Department of Energy and Climate Change (DECC) said on Thursday. The new government said last month it would announce measures to end onshore wind subsidies, a commitment made largely to placate opposition to large-scale wind farms in rural England. Many onshore wind investors have argued that an end to subsidies for large facilities would raise energy bills as it is the cheapest form of renewable energy. "This is a blow, not just to the industry, and could damage our reputation as a good place to invest in energy infrastructure," said Katja Hall of business lobby group the Confederation of British Industry (CBI) New legislation will be introduced to close the Renewable Obligation (RO) support scheme to new onshore wind from April 1, 2016, DECC said in a statement. However, up to 5.2 gigawatts of onshore wind capacity projects that already have planning consent, grid connection deals and land rights could be eligible for grace periods, it said. Under the RO, onshore wind projects built before March 2017 would have automatically received funding but the scheme will now close a year early. "We want to help technologies stand on their own two feet, not encourage a reliance on public subsidies," DECC said. Last year, state subsidies of 800 million pounds ($1.3 billion) helped onshore wind generate five percent of Britain's total electricity supply, DECC said. British utility SSE has invested significantly in onshore wind and has 1 gigawatt of operating capacity as well as 280 megawatts of capacity under construction. SSE has previously said it would be able to add additional capacity before the RO ceased in 2017. "It is unlikely that SSE will be able to complete all of its proposed capacity by the earlier 2016 deadline," Jefferies Group analysts said in a research note. At the end of 2013, Britain boosted support for offshore wind to attract multi-billion pound investments and maintain its lead as the world's biggest offshore wind market ($1 = 0.6310 pounds) (Reporting by Nina Chestney and Oleg Vukmanovic; Editing by Mark Potter and William Hardy)