Tuesday, 30 March 2010

Wealthy landowners make millions in the wind rush

Jonathan Leake and Chris Hastings

SOME of Britain’s richest landowners are set to earn millions by building wind farms to exploit the lucrative system of subsidies for generating renewable energy.
Among the biggest potential beneficiaries is the Duke of Roxburghe, whose planned 48-turbine scheme on his Scottish estate would generate an estimated £30m a year, shared with developers. About £17m of this would come from subsidies from consumers.
Others seeking to capitalise on the new wind rush include the Duke of Beaufort, Sir Reginald Sheffield, father of Samantha Cameron, and Michael Ancram, the Tory grandee.
The growing interest in wind farms stems from the government’s subsidy system. A typical three-megawatt turbine will generate about £670,000 income a year, of which £350,000 comes in subsidies. Since the machines cost £2-3m and have a lifetime of about 25 years, the profits are considerable, even after running costs are deducted.
Many schemes have gone ahead despite objections from local residents concerned about blight and from economists who bridle at the “excessive” cost of the subsidy system.
However, developers, landowners and wind farm supporters say Britain must accept changes to its landscape, plus the cost of subsidies, as the price of cutting CO2 emissions.
One of them is RidgeWind, a company set up by Hg Capital to seek out large landowners to set up wind farms. Its website declares the company’s turbines are “contributing to a cleaner environment and reducing global warming”.
Last August RidgeWind switched on an eight-turbine wind farm at Bagmoor, part of the 3,000-acre estate of Sheffield, the father-in-law of the Tory leader. Industry estimates suggest this should generate an income of about £3.5m a year, shared with developers.
RidgeWind will soon erect 10 more turbines, each about 410ft high, on the Ellingham estate in Northumberland, owned by Lady Belinda Gadsden, whose title dates back to 1642.
Critics say it is ironic that the Renewables Obligation certificate (Roc) scheme was created by a Labour government but is handing large profits to investors and country landowners.
Under the system, renewable energy generators can claim a Roc certificate for each megawatt hour of electricity produced. A 3MW turbine produces about 7,000 megawatt hours a year, with the electricity fetching £320,000 and the Rocs another £350,000 at current prices.Power companies are obliged to buy Rocs to meet government targets for renewable power but pass the cost to consumers. They also take the bulk of wind farm profits.
One controversial proposal is at Mynydd y Gwair near Swansea on land owned by the Duke of Beaufort’s Somerset Trust, where RWE npower wants permission for 19 turbines. The scheme, which has 1,600 objectors, would generate an estimated income of about £12m a year including £7m of subsidy.
A spokesman for RWE said: “We will build and operate the wind farm and the landowners will receive an annual payment.” In Scotland, the Duke of Roxburghe, who is worth £80m, is seeking planning permission for 48 turbines on his grouse moor at Fallago Rig in the Lammermuir Hills in Roxburghshire, again in the face of strong local opposition.
The scheme, which could generate income of more than £30m a year, is a joint venture with North British Windpower, a company whose shareholders include Ancram, the former Tory deputy leader and 13th Marquess of Lothian.
Economists are concerned about the cost of subsidies, which are estimated to add £13.50 to the average household’s annual utility bills. Professor David Newbery, director of Cambridge University’s electricity policy research group, supports wind power but says Rocs are “bonkers”.
He said: “It is shovelling money towards people who have been lucky enough to get planning permission, [and] it encourages the construction of wind farms in remote places where it is very expensive to connect to the national grid.”
RenewableUK, the wind industry’s trade organisation, said Rocs had helped increase renewable energy. It said on its website: “The case for wind energy is simple: it is renewable, economic, safe and good for the environment.”
Additional reporting: Georgia Warren