WIND farms have had a lot of subsidy over the last couple of decades, and the total cost is rising by billions every year. Nevertheless, the industry is keen to have much more, and was reportedly putting pressure on Jeremy Hunt to deliver the goods in his Budget last week. Having failed to make any headway, it is not letting up in the aftermath either.
Doing so does rather put the kibosh on the picture which has been painted for the last six years of an industry which has delivered one technological breakthrough after another, with the result that costs have fallen through the floor. This, it seems, was a case of spokespersons being more than a little economical with the actualité. The truth is that costs are rising steadily as experiments with larger turbines and, for offshore units, deeper waters fail to deliver.
If the Green Blob does win further concessions from the Chancellor, it will be a travesty. The industry is already awash with government largesse. Not enough to hide the catastrophic economic fundamentals entirely, it’s true, but nobody can say that the taxpayer and electricity consumer have not been extremely generous.
Money is still pumped into the hands of investors from the Renewables Obligation – billions every year – and while the Contracts for Difference (CfD) scheme went into (much trumpeted) reverse last year, so that generators paid back into the system, normal service has been resumed since Christmas, and you the public have contributed a not-inconsiderable £100million or so already this year.
The CfD system has a rather natty hidden subsidy as well, because all the contracts are inflation-linked, so that wind-farm income goes up every year, even though most of the costs are capital and therefore not subject to inflation. That was a clever rip-off of the consumer by Whitehall, wasn’t it?
The CfD payments are also uplifted each year in line with increased charges for balancing the grid. These costs have soared as grid managers struggle to deal with the chaos delivered by gigawatt after gigawatt of unreliable renewables joining the system. Do you see what is happening? The wind farms cause the trouble, but they are exempted from the costs. It’s as though someone throws litter all over their back garden and then charges the neighbours to tidy it up.
Similarly, the cost of upgrading the transmission grid to get wind-farm electricity to market is socialised. Although offshore wind farms have to pay to get their electricity ashore, the cost of upgrading the network to get power from, say, rural Aberdeenshire to the West Midlands is socialised too. Another hidden subsidy!
Many of us have heard about the so-called ‘constraint payments’ which wind farms receive when power cannot be delivered because the wires can’t take the load. These are commonly held to be a payment to ‘switch off’ but this isn’t necessarily true, and herein lies another way to loot the consumer’s purse. If the wind farm can deliver power through a private wire to a battery, say, it can take the constraint payment, tuck the power away, and then sell it back to the grid in times of shortage for a huge profit. Double payment for the same electricity! No doubt the bright sparks in Whitehall had to think long and hard to come up with that particular wheeze.
And finally, in case you were thinking that it would be nice to claw some of this money back in some way, perhaps through a windfall tax, be aware that CfD contracts have a clause which effectively exempts them from any tax rises at all.
As you can see, renewables are already an extraordinary rip-off. The scale of the looting is thoroughly depressing. But there is little sign of anything changing soon. There is simply too much money to be made.