The UK’s new Labour government didn’t take long to rip up its predecessor’s energy policy. Barely a week into Downing Street, newly appointed chancellor Rachel Reeves announced the end of the de facto ban on onshore wind, terminating the nine-year moratorium and in her words “paving the way for a green energy surge”.
In her first speech, Reeves pledged to double the UK’s onshore wind capacity by 2030. The National Grid estimates that there are more than 2,600 onshore wind projects operating across the UK today, with a combined capacity of over 15GW. Scotland leads with a 43 percent share, compared to 37 percent in England, 11 percent in Northern Ireland and 9 percent in Wales.
“Labour’s goal of doubling onshore wind energy by 2030 is ambitious, but the government has moved quickly in its early weeks to lay out a strong reform agenda,” says Natasha Luther-Jones, partner and global co-chair of energy and resources at international law firm DLA Piper. “By eliminating footnotes 57 and 58 of paragraph 163 of the National Planning Policy Framework, onshore wind projects will now face the same planning criteria as other developments, providing much-needed clarity and reducing the uncertainty that previous policies created.”
Waiting for the green light
Despite the nine-year moratorium, investor appetite appears to be as strong as ever. In July, a survey of UK pension funds and insurers’ attitudes towards renewable energy, conducted by specialist real assets manager AlphaReal, found that 87 percent of respondents planned to increase investment in onshore wind over the next five years. As many as 30 percent said they expected to increase allocations significantly.
The survy also found that onshore wind was the most popular renewable energy choice among UK pension funds and insurers, with 67 percent of respondents saying they already had allocations.
“Onshore wind remains one of the most cost-effective ways to generate renewable electricity in the UK, so removing the de facto ban is undoubtedly good news for the UK’s net-zero transition,” says Bruno Gardner, head of climate change and nature at insurance provider Phoenix Group. “We are excited by the potential to invest in onshore wind projects that can both support the transition to net zero and deliver good customer outcomes.”
The most recent renewable energy auction, Allocation Round 6 (AR6), in September, also showcased the demand for UK clean energy, with a record 131 projects securing just over 9.6GW in new capacity, more than double the level auctioned last year. This one auction alone represented an increase in total domestic capacity of more than a quarter. It was offshore wind that dominated proceedings, with just over 4.9GW, but almost 1GW in onshore wind capacity was also auctioned. Scotland led the way once again, partly due to the ongoing planning challenges in England.
For instance, in late August, AlphaReal announced the completion of a 13.5MW onshore wind project near Rigmuir, Scotland, where a disused landfill site was repurposed to produce clean energy. In 2023, the firm also completed three renewable energy acquisitions worth more than £90 million ($121 million; €108 million), including 14 turbines in Cumbria and 10 across Fife, County Durham and Bedfordshire. AlphaReal said the acquisitions completed the £180 million capital deployment from its Wind Renewables Income Fund.
Breaking the deadlock
At first glance, the British public appears very positive about onshore wind, with a UK government survey from 2023 having found that 77 percent supported the construction of new onshore wind farms. However, less than half (43 percent) said they would be happy to see them built in their local area.
“Despite general public support for onshore wind farms in the UK and the push for green generation, individual projects often face strong opposition from local communities concerned about the impact on natural landscapes, labelling them as an ‘attack on the countryside’,” says Lucille De Silva, a partner at global law firm Dentons. “The government will need to find creative ways to incentivise and win planning consent from local communities.”
Euan Bremner, a partner at UK law firm Burges Salmon, agrees: “The removal of the de facto planning ban is a major first step in the right direction, but developers could continue to face local and national opposition groups when consenting developments at scale.”
He points out that changes to the planning system alone will not get the industry to where the UK government wants. “Developers will need to secure land (which is already congested in proximity to many major sub-stations), while thought will need to be given to the supply chain (turbine suppliers and the like) and whether we have the correct port and other infrastructure to accommodate this.”
Constrained grid capacity – certainly when compared with the state of play during the first wave of onshore wind developments – is another significant barrier. Even if the UK government can achieve its onshore capacity goals, much of that new capacity could remain locked in grid connection queues for years. According to a report published in July by European wind advocate WindEurope, the UK already has more than 100GW of wind energy projects awaiting grid connection assessments.
“The government’s independent electricity networks commissioner highlighted that building the necessary grid infrastructure to connect wind farms to homes can take around 14 years, although there is potential to reduce this timeframe to seven years,” says Graham Richmond, a partner at Dentons. “Achieving Labour’s onshore wind targets will require significant investment, as well as coordination to upgrade and expand transmission networks.”
Rob Marsh, a partner at global law firm Norton Rose Fulbright, agrees that more needs to be done before the market can react in any meaningful way. “Though there are positive signals coming out of AR6, and clearly the development community has been readying itself for a renewed charge in this sector, there will need to be further clarity around exactly how the government will support this and how the grid reforms will play out.”
For now, then, investors will be watching which way the wind blows.