Subsidies make nonsense of wind farms
Farming depends on subsidies – even wind farms. The world’s biggest wind farm is to be built in the Thames Estuary - not because it makes economic sense but because taxpayers will pay its losses.
When it comes to saving the planet conventional business models go out of the window.
It was madness to pay homeowners to put mini-windmills on their roofs to generate insignificant amounts of power intermittently and inefficiently. Owners got a green glow but only because the government footed the bill. Any cut in the homeowners’ energy costs were more than offset by a rise in state spending.
And it is madness to build the London Array wind farm to produce intermittent and inefficient electricity simply because of a government subsidy.
We know Array’s numbers do not stack up alone. Shell, with its army of cost accountants, pulled out of the wind-farm consortium last year because of economics that, even with a subsidy, did not work. Eon, the German energy group and main array partner, admits the project was unviable too.
So now the UK government has increased the subsidy and suddenly Eon admits that a scheme that was on the knife edge will now be viable and it to proceed.
Wind farms already receive 50 per cent more subsidy than onshore generating schemes through renewable obligations certificates. Now they will receive double the usual annual subsidy. Luckily this budget provision is only temporary so it looks designed to get London Array working but not apply to any other madcap schemes.
The first £2bn phase of Array will see 175 turbines at the entrance to the Thames generating 650 megawatts on windy days, enough to light 500,000 homes. It will help the government meet its carbon emission targets and could secure energy supplies so long as weather or terrorists do not sabotage the windmills.
But it will not create British jobs, which might seem a current objective. The turbines will be German built, the British-based (but Danish-owned) Vestas company having already cut 600 jobs with the likelihood of closing its plant.
If customers were offered conventionally generated electricity or high-cost green power they would take the cheap option. They are now allowed the choice however, so they will pay extra for wind power even though it makes no sense.
