Britons pay more for wind farms 

Only six countries out of 26 nations and regions examined in the study paid more and none are considered big players in the wind industry.

Brian Binley, the Conservative MP and chairman of the All Party Parliamentary Group for Clean Coal, who unearthed the report, yesterday said: “The cost of energy produced by wind farms, which is almost three times the cost of energy produced by carbon fuels, is placing a massive burden on households and businesses.”

There are 526 onshore wind farms in Britain, according to RenewableUK, the trade industry body, typically producing about five per cent of the country’s electricity.

The growth in wind farms has attracted much criticism, with opponents complaining that they are not only costly but also ruin countryside. Critics argue that they cannot be relied upon because when the wind does not blow sufficiently, backup power stations using conventional technologies are necessary to prevent blackouts.

The study into wind farm subsidies was commissioned by the Department of Energy and Climate Change (DECC). It found that, overall, Britain’s wind energy subsidy was 35 per cent more expensive than the international average.

The report concluded that Germany paid £80 per megawatt hour for its electricity from onshore wind, while in Denmark it costs less than £60 per megawatt hour. Both countries have been at the forefront of promoting wind energy. The fact that they pay less for it than Britain will add to criticism of the costs.

The wind industry has said the subsidy is fair because the cost of building wind farms is greater in Britain than elsewhere and that its costs are higher than abroad.

The report, by Frontier Economics, a well-respected consultancy, concludes that certain charges are higher – such as the transmission charge for connecting wind farms to the National Grid – but that “there are inherent difficulties” in detailing the extra costs given “commercial confidentiality” over wind farm deals.

The report adds: “Higher development risks have also been cited as a possible reason [for higher costs] although we did not find strong evidence that these risks are higher in the UK.”

The report suggests subsidy costs tend to be highest in countries with the lowest wind speeds. In other words, subsidies are necessary where turbines cannot produce enough electricity to sell on profitably. But the report notes that Britain is far windier than Germany and its subsidy is higher. RenewableUK boasts that “the UK is the windiest country in Europe”.

The report concludes: “On all measures, the UK support levels rank as between the 7th and 9th highest out of the 26 countries and regions considered.”

The lowest support levels were generally seen in the US, Canada and Australia. Japan had the highest level of subsidy, followed by Italy.

The wind farm subsidies were introduced by the Labour government to encourage development of the renewable energy industry. Britain has to meet legally binding green energy targets by 2020 or face financial penalties.

Dr John Constable, the director of the Renewable Energy Foundation, a think tank that has been one of the biggest critics of subsidy levels to wind power, said the report confirmed Britain’s subsidies were too high.

He said: “The only possible justification for income support to renewables is that it will drive down costs, but the UK Government ignored this principle and decided to use such subsidies to meet arbitrary and foolishly high targets for green electricity in a very short timescale.

“The wind industry, in particular, was thus able to name its price for the necessary ‘Express Service’. The consumer interests were simply ignored.”

The Coalition is split over the deployment of wind. Back-bench Conservative MPs have demanded swingeing cuts to the subsidy, while Ed Davey, the Liberal Democrat Energy and Climate Change Secretary, has resisted calls for drastic action.

DECC said last week that the Frontier Economics report was published on its website, but admitted no press release accompanied its publication. A spokesman said reports “were not routinely press-released”.

She pointed out that since the report’s publication, the Government has announced a cut in the subsidy by £5 per megawatt hour that applies to future projects.

She said: “Onshore wind is one of the cheapest large-scale renewable technologies and makes a valuable contribution to our energy mix.

“We recently reduced the subsidy for onshore wind… in recognition that the costs of the technology are becoming more competitive.”

DECC said new European Commission guidelines on “state aid” for wind farms were likely to force the Government into further cuts in subsidies and more quickly than previously thought.

RenewableUK said it was difficult to compare costs across countries.

Dr Gordon Edge, its director of policy, said: “There are so many additional charges here that wind farm developers abroad simply don’t have to pay.

“Despite this, onshore wind is still the cheapest way to generate large amounts of clean electricity from any renewable source.”

He claimed there were “several barriers to driving costs down” including the expense of the planning process.

The Government also needed to “speak with one voice on its support for renewable energy” as it “sends a clear signal to investors which makes capital cheaper and drives costs down”, he added.