IN A report on wind farms on Wednesday, the Times wrote: ‘Labour argues that the ban on onshore sites has raised energy bills by £150. Ed Miliband, the shadow climate secretary, said Tories were “dinosaurs” for opposing them.’
It is a claim that has often been bandied around recently. So what is the truth of the matter?
The first point to make is that onshore wind was never banned. What did happen was that in 2016, subsidies were withdrawn from any new construction, while wind farms had to obtain local planning permission. It is quite extraordinary that Labour don’t want communities to make these decisions themselves.
The most recent wind farms built under the subsidy mechanism are paid an index-linked, guaranteed price of £100.31/MWh. For many years until last year the market price for electricity has hovered between £40 and £50/MWh most of the time. In other words, those onshore wind farms were heavily subsidised until last year, when market prices rose. The cost of subsidies is of course passed on to energy bills.
There is no evidence that the construction costs for wind farms have fallen since then. It is therefore evident that if more wind farms had been built since 2016, we would have been paying double the wholesale price until last year when prices began rising.
Of course since then wholesale electricity prices have rocketed because of the rising cost of natural gas. But nobody forecast that this would happen in 2016, and clearly the right decision was made by the government, given the facts at the time.
Over this year, wholesale prices of electricity have averaged £177/MWh. As the guaranteed price under the Contracts for Difference scheme is £100.31, the difference is refunded by generators and subsequently knocked off our bills.
Miliband’s claims of a £150 saving are based on an analysis by Carbon Brief, a lobby group for renewable energy. According to them, based on previous trends, an extra 5.4 GW of onshore wind would have been built if subsidies had not been withdrawn. The lost output works out at 11.8 TWh, and consequently the saving would have amounted to about £900million, which would only have knocked about £10 off household bills, which account for about a quarter of total UK electricity consumption.
In reality, you cannot directly compare the cost of intermittent wind power with other dependable sources. Our bills are much higher because of the costs incurred in grid balancing costs and other items, which directly result from the intermittency of wind and solar power.
But what Ed Miliband conveniently forgot to tell us was the cost of all the renewable subsidies which we have already paid out, and will continue to for years to come. In the last ten years, these have totalled £78billion, and in the next six years will cost a further £56billion, according to data from the Office for Budget Responsibility (OBR).
All of these costs lie at the door of Ed Miliband, who pushed through the Climate Change Act in 2008. If he really cares about our electricity bills, he would immediately campaign to abolish all subsidies and suspend the carbon tax, which is also responsible for energy bills being much higher than they need be.
He won’t, because of his obsession with climate change.