Wind Energy – A Bad Deal

Five big new offshore wind farm projects, already awarded £12 billion in subsidy contracts less than a year ago, are now said to have been given far too generous a level of subsidies, with higher costs to the consumer over the next fifteen years.

The National Audit Office, Competition and Markets Authority and Public Accounts Committee have stated their concern that  the contracts were awarded last April without proper competition. The eventual subsidy bill is forecast to reach £16.6bn, with the majority, £11.7b, going to the wind farms. In a critical report, the NAO said:

“It was not convinced that the Government sufficiently protected consumers’ interests, because it awarded the contracts without competition.” Telegraph

On Thursday 26th Feb, ministers will announce more subsidies for another big offshore wind farm that was subject to competition, but claiming that it will be cheaper as a result. Industry sources also concurred that wind farms had been given too much in subsidy.  Keith Anderson of Scottish Power, whose proposed East Anglia wind farm is one of those competing for subsidies said the subsidy price awarded this time would be lower than last year’s. Telegraph

The biggest beneficiary of the non-competitive contracts was Danish energy giant DONG Energy (Danish Oil & Natural Gas), which owns three of the five offshore wind farms and stands to reap £7.8bn in subsidies. There is no mechanism to get back the overpaid subsidies from the previous contracts.

The source of the problem is the government’s obsession with reducing the CO2 output of the electricity generating industry, through the disincentive of adding ‘carbon’ costs onto the cheapest forms of electricity, and heavily subsidising the most expensive which are renewables.

levelisedIf the deliberately introduced ‘carbon’ costs and green taxation are taken out of the figures, then gas becomes £61/MWh and coal £57/MWh. By comparison the cheapest offshore is £134/MWh and solar £169/MWh, between two and three times the real cost of conventional energy. Green taxation costed each household £1,629 in 2013, it is not hard to see that the culprit for this is the generous and in fact unnecessary subsidy freely dished out by DECC and the government. SW

It is incredible to see a government charged with looking after the interests of its population, so wanton in forcing high prices onto an essential commodity, based on so little rationale.

Steven Whalley

27-02-15