Vestas secures £6m UK grant, but stands by factory closure

The controversy surrounding industrial action at Vestas' wind turbine manufacturing facility on the Isle of Wight took a fresh twist yesterday. The government announced that while it had no plans to save the factory from closure, the Danish company would receive a grant of more than £6m to help fund a new R&D facility at the same site.

The Department of Energy and Climate Change said the controversial wind turbine manufacturer would be the first firm to be awarded a grant from a £10m fund earmarked for offshore wind research and development projects. It said that Vestas would be awarded £3m from the fund with a further £3m provided by the South East England Development Agency.

A spokesman for the Department that the government had also released a second £10m tranche of R&D funding for offshore wind projects and that further awards would be announced in the near future.

The award appears to confirm that plans for a new Vestas R&D facility on the Isle of Wight will go ahead, although a spokeswoman for the company declined to comment on the grant.

The new plant is expected to create up to 150 jobs and will bolster Vestas' position in the UK's fast-expanding offshore wind energy industry.

However, the move appears to have done little to placate supporters of the 25 Vestas workers, whose sit-in at the factory has now entered its second week.

Energy and climate change secretary Ed Miliband was heckled by protesters at an event in Oxford yesterday over the government's refusal to intervene to save the Vestas factory and with it up to 600 jobs.

Edward Maltby, of Workers' Climate Action, which is leading the protests outside the Vestas factory, told the Guardian that the new funds for an alternative facility did not go far enough. "£6m is pocket money," he said. " It's not a significant investment. Why are we throwing money at this company? We should nationalise it because Vestas is not prepared to behave decently."

However, a spokesman for DECC told BusinessGreen.com that the government remained unconvinced by the case for nationalising the facility. "It is producing turbines for the US market and the company was not looking for that sort of [financial] support from the government here," he said. "They want a stronger market here and they have said the biggest problem is the planning system. We are in the process of addressing that, but it can't be done as quickly as we would all like."

Vestas is reportedly preparing to seek a possession order tomorrow as it tries to regain control of the factory and formally close the facility on Friday. A spokeswoman for the company again refused to confirm reports it was preparing to seek the legal powers to end the sit-in.

The announcement of the new grant for Vestas was made alongside confirmation that the government has secured up to £1bn in new loans for onshore wind energy developers through a coalition of the European Investment Bank, BNP Paribas, and two banks in which it has controlling stakes, RBS and Lloyds Banking Group.

The news was welcomed by the British Wind Energy Association, which said that the new financing should help many projects totalling 6,000MW in capacity which have planning permission but have struggled to attract investors.