European Commission to Britain: Yeah, we’re going to need you to get rid of those wind-farm subsidies
posted at 5:21 pm on January 7, 2014 by Erika Johnsen
Britain is now the number one producer of wind energy in the entire world, but as even The Economist explained just last week, theirs isn’t so much a worthy example to be emulated as it is a cautionary tale. Brits are struggling beneath steeply rising electricity prices, and the wind energy they once imagined would help to mitigate those costs with a green alternative is actually contributing to the heady increase thereof:
Britain gets more electricity from offshore wind farms than all other countries combined. In 2012 it added nearly five times more offshore capacity than Belgium, the next keenest nation, and ten times more than Germany. Its waters already contain more than 1,000 turbines, and the government thinks capacity could triple in six years. …
Unfortunately, offshore wind power is staggeringly expensive. Dieter Helm, an economist at Oxford University, describes it as “among the most expensive ways of marginally reducing carbon emissions known to man”. Under a subsidy system unveiled late in 2013, the government guarantees farms at sea £155 ($250) per megawatt hour for their juice. That is three times the current wholesale price of electricity and about 60% more than is promised to onshore turbines. It is also more than the £92.50 which Britain’s new nuclear plant at Hinkley Point will get—though that deal is for 35 years, not 15. …
Another hitch is that much of the money lavished on building offshore wind farms leaves the country. Only about 25% of capital spending flows through British companies, compared with 70% of the cash invested in North Sea oil and gas. Almost all of the country’s existing offshore turbines were produced by two firms, Siemens and Vestas, which manufacture them in Denmark. Fleets from continental ports commonly construct the farms.
Which is probably why Europe at large isn’t quite as keen on continuing with every possible manner of green-energy subsidies as some of its various governments seem to be. European Union antitrust regulators are already investigating Germany for what look like some dubious practices in subsidizing their own green-energy plans, and the EC is now ever so gently suggesting that Britain take a beat on its own grandiose wind-farm ambitions. Via the Telegraph:
The European Commission is to order Britain to end wind farm subsidies.
Officials have told ministers that the current level of state support for renewable energy sources must be phased out by the end of the decade. …
The commission, which oversees the European single market, is preparing to argue that the onshore wind and solar power industries are “mature” and should be allowed to operate without support from taxpayers. Under the single market rules, European Union governments are forbidden from providing long-term “state aid” to domestic industries that can function without support. …
Although Conservative ministers sometimes criticise the EC for its interference in domestic matters, they are understood to be keen to cooperate in the case of renewable energy subsidies.
“I never thought I’d say this but the commission is absolutely right about this,” a Conservative minister said.
“It’s absurd that taxpayers are being made to subsidise wind technology.”