Consumers beware the costly spin of wind turbines

The Sunday Times
March 29, 2009

Jonathan Leake, Environment Editor

The view from the top could not be clearer: Ed Miliband, the minister for energy and climate change, said last week that opposing the onward march of wind turbines – on which the government is pinning its hopes of meeting its targets on renewable energy – should be as “socially unacceptable” as not wearing a seatbelt or failing to stop at a zebra crossing.
Hmm. Tell that to the people who believe the view over Britain’s last remaining wildernesses is about to be destroyed for ever – and for a very dubious set of returns. Will wind farms turn out to be a truly revolutionary source of energy for the future or an expensive folly?
Whatever the final answer, there’s no doubt about the expense. Over the past decade developers have grown rich on lavish – and, critics would say, misdirected – government subsidies. Wind farming is the new gold rush.
So far, renewable power companies have erected 2,390 wind turbines at 200 onshore sites. Another 4,800 are planned, with many more to follow. The power generated will be carried away by lines of pylons crossing Snowdonia national park and areas of outstanding natural beauty in Anglesey, Kent, Lincolnshire and Somerset. For enthusiasts such as Miliband, this destruction is the price Britain must pay.

Alas, it’s not the only price. A quick calculation shows just how lucrative wind farms can be for the lucky few: take the output of a 3-megawatt (MW) turbine, standing about 550ft high. In a good wind it can generate enough power to meet the annual needs of about 1,600 households.
The owner of such a machine could expect to sell the 9,200MW hours of power generated in a year for about £331,000 at today’s prices. Not bad, but the real profit lies elsewhere, in the form of little bits of paper known as renewable obligation certificates (Rocs). Under a government scheme, the wind farmer is allowed to “create” one Roc for each megawatt hour of electricity generated – and to charge the consumer for doing so.
Currently each Roc is worth £48, so our 3MW turbine is generating an additional £441,600 each year, simply from the sale of Rocs. Add this all together and that one machine will earn £772,600 a year, or just under £20m over a typical 25-year lifetime – assuming the subsidies continue at the same rate. And it will have cost only around £3m£4m to build.
In other European Union countries the payback can be even more astonishing. Germany subsidises renewable power generation through the so-called “feed-in tariff” (Fit). Anyone generating solar, wind-powered or hydro electricity gets a guaranteed payment of four times the market rate – about 35p a unit – for 20 years.
The cost is spread among users so that only €1.50 (£1.40) is added to the average bill a month. The German system is deemed so successful that Fits have been adopted in 19 countries and the recent Climate Change Act allows for their introduction here.
In Britain, however, while the government has thrown money at renewable energy generators, it seems not to have anticipated the huge additional costs that wind brings with it.
The problem is this: wind does not blow all the time, so if Britain is to keep the lights on when the breeze slackens, wind power needs support from other forms of power. This means that for every wind farm we build, there must be a coal or gas-fired power station waiting in the wings to take over.
Right now Britain has about 76 gigawatts (GW) of generating capacity, mostly nuclear, coal and gas. The government has said it wants 30GW of our power to come from wind by 2030, but to achieve that it will also have to build or maintain an extra 30GW of back-up power stations. So by 2030 Britain will have to sustain power stations capable of generating 100GW of electricity to provide the power we now get from 76GW.
Then there are the new European Union regulations, which stipulate that Britain must get 15% of its energy from renewable sources by 2020. To meet this target overall will mean producing some 30% of our electricity from renewables – and wind is the only mature technology able to deliver it.
Dieter Helm, professor of energy policy at Oxford University, believes this is too ambitious. “We could build and install the thousands of turbines and back-up power stations needed, but only at great cost,” he says. “It is bound to fail but no one dares talk about that – or not yet.”
The other thing government does not like to talk about is the cost to consumers. At the moment, subsidising wind turbines adds £12 to the typical annual domestic power bill of £474. This is small now but will surge as more turbines are built.
Will it be worth it? The renewables obligation, by the way, is just one of the charges for dealing with climate change already being added to our energy bills. The average power and gas consumer is already paying an annual extra £31 for carbon permits, under the EU emissions trading scheme, and another £38 for the UK government’s carbon emission reductions programme, which subsidises home energy efficiency programmes.
Many wonder if such mounting charges are politically sustainable. A couple of years ago Ofgem, the energy regulator, warned the government that the renewables obligation system was handing wind farm operators windfall profits that could provoke a consumer backlash – perhaps one as angry as the fuel tax protests of 2000. What price then for Miliband’s bleats about the “social unacceptability” of opposing wind power?