​Third sector groups criticise UK government plans to drop subsidy scheme a year early

Private investment for developing renewable energy projects, such as windfarms, is suffering because of a halt in government subsidies.

A survey by Scottish Renewables said investors were being discouraged from investing after the UK government announced new onshore wind farms would be excluded from a subsidy scheme from 1 April 2016 – a year earlier than expected.

The Renewables Obligation (RO) is funded by levies added to household bills and has proven to be hugely popular.

But investors, such as banks, are rewriting their terms and conditions in light of the withdrawal of the RO making it increasingly difficult for companies to get financial backing.

The survey asked 10 major lenders about their willingness to provide investment.

Of the seven who responded, more than half said they were not prepared to lend until the UK energy bill had received Royal Assent, which is not expected until next year.

The government said it was taking the action to address a projected overspend on subsidies.

However, the move has been condemned by environment organisations.

These are projects that could bring around £3bn of investment - Michael Rieley

Michael Rieley, senior policy manager at Scottish Renewables, said: “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," he said.

"With the decision to end support a year earlier than planned, around 2GW of onshore wind projects in Scotland have been put at risk.

"These are projects that could bring around £3 billion of investment and provide enough generation to meet the equivalent electricity demand of 1.2 million Scottish homes."

The UK government said there were enough projects in the pipeline and that subsides were not currently needed to attract further investment.

A spokesperson said: "Government support has driven down the cost of renewable energy significantly. As costs continue to fall and we move towards sustainable electricity investment, it becomes easier for parts of the renewables industry to survive without subsidies."

However WWF Scotland director Lang Banks said the government's energy plans were damaging investor confidence in the cheapest form of renewable technology.

He added: “It's not just investment and jobs that are at risk by their reckless policies, but our ability to cut carbon emissions."