When is a turbine subsidy not a subsidy?
I should have got round to this quicker but it's been a busy week! On Wednesday's Daily Politics Transport Secretary Philip Hammond said that "onshore wind [turbines] doesn't need subsidy anymore, onshore wind can pay its way."
I expressed scepticism when he said it, but didn't have time to probe his claim. Anyway, since then I've looked into it and here is my understanding.
Onshore wind turbine generators don't necessarily get a direct subsidy to build or operate the turbines (though some might) but under the government's Renewables Obligation electricity companies must buy power generated by onshore turbines at twice the market rate.
This 100% higher price is then passed on to the rest of us in higher electricity bills. (The price for offshore generated power enjoys, I'm told, an even higher officially-mandated mark up).
So it's not so much a subsidy in which government doles out billions of our money to keep the turbines going. It's an artificially high price they are empowered by law to charge to keep them going, which is then passed on the rest of us. Otherwise, as I understand it, the turbines would be uneconomic. You may conclude that is as much a subsidy as a straight taxpayers' grant.
That, I emphasise, is my understanding. It's a complicated business and Mr Hammond (or Mr Huhne at Energy) may be able to correct me. I know Whitehall departments read this blog so I look forward to the replies of either the Hammond or Huhne departments, whose responses we will of course publish. (see update below)
Readers will no doubt have plenty comments of their own to make.
Watch Johnny Ball's film about climate change scares that prompted the debate
UPDATE:
We have now heard from the Department for Energy, who want to point blog readers to this link.
A spokesman said: "The current high oil price, and the increasingly clear evidence on climate change, underline the need to move away from fossil fuels.
"Onshore wind is one of the cheapest forms of low carbon energy and the UK has a massive natural resource to exploit.
"There is no direct public subsidy, but wind energy does benefit from the Renewables Obligation."
See the newest blog entry for Andrew's comments on this.
~RS~q~RS~~RS~z~RS~15~RS~)
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Hello,
With regards to the quote system where we pay higher prices for our electricity to pay for the wind power quote:
Thats ok when you look at the long term position. In fossil fuel power, something like 70% of the cost over the life time is fuel cost which is set to rise as energy prices march ever higher.
There for wind power is a really good way to stabalise energy prices in the future.
With regards to back up power, which is only necessary once grid % is over 20%, then its not actually very expensive to provide back up fossil.
Give that in the long run, wind power is better as it saves on imports of energy and also, that the main cost in wind power is capital cost of building the turbines: back power is relatively small additional cost.
Gas for example is very cheap on a capacity basis, but expensive to run for 20 years, day in day out because gas is expensive and likely to get more expensive. What works therefore is to have wind power with gas back up.
The amount of gas that we would be use would be hardly what it would be if the power grid was gas dependent. But the whole system runs cheap when the wind is blowing.
Once we do this, we are insulated from price shocks.
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I mean't of course, Quota rather than Quote
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And the alternative? Making no special provision for renewables and letting market forces dictate what we build. That's not exactly going to put us in the forefront or green energy, nor in the most secure position as the fossil fuels we are importing approach depletion and increase in price.
A carbon tax would have similar effects, i.e. making fossil fuels "artificially" more expensive and "subsidising" low-CO2 power. But is there really anything wrong with that?
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There is something that just doesn't seem logical about this....... but i'm sure someone "Green" person will explain in depth why it all sensible that we the consumer should pay to build the windfarms through higher prices....What happened to free markets????
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Have you been reading timworstall.com ? There is lots of exposition there, on this kind of thing, plus the man's book, of course.
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'On Wednesday's Daily Politics Transport Secretary Philip Hammond said ...'
Readers will no doubt have plenty comments of their own to make.
The disconnect between what politicians think, say and do, vs. accuracy & reality, does often seem rather 'broad'.
In the same debate, in a rare example of cross-party unity, Mr. Hammond and Mr. Darling also tried to dismiss Mr. Ball's concerns on agenda-driven education curricula by describing the GCSE Chemistry primer held up as 'just one book'. I have written to both to enquire if they are happy, as they seemed to be, that it came to be, and remains, for my kids to be examined upon.
Their claims on education also might bear some further investigation....
http://ccgi.newbery1.plus.com/blog/?p=340
Preferably not of the Guardian variety.
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I also recall that the subject of electric cars came up, with Mr. Hammond confident of their glowing prospects (even if, as memory serves, he was keener on his Jag just recently)...
http://www.bbc.co.uk/news/uk-england-coventry-warwickshire-12658942
One supposes it is all the Americans fault again?
http://www.engadget.com/2011/03/06/electric-car-sales-watch-281-volts-and-67-leafs-sold-in-us-duri/
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A subsidy direct from consumers is still a subsidy. Just goes to show that politicians aren't concerned with being caught out in untruths these days, as no sanction is applied. But say something politically incorrect, and goodbye career.
I'd advise anyone wishing to comment to make it quick. The last one was shut down after just a day and seventeen comments, which frankly is pretty disrespectful to all those who took the trouble to comment.
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At a time of relentlessly increasing energy prices and falling incomes, it doesn't seem right that energy companies are allowed to charge artifically inflated prices for renewable energy...
My other point is that the cost of producing wind energy is surely going to be constant, or reasonably so. Wind energy is not subject to the fluctation in fuel prices that affect gas-fired, oil-fired and coal-fired power stations.
So as the prices of those fossil fuels increases, sooner or later the cost of producing energy by those means will be equivalent to that of wind enegery.
I would therefore expect to see that factor of 100% reduce to zero, not stay at 100%.
It simply can't be right that a 20% increase in electricity produced by burning fossil fuel leads to a 40% increase in electricity produced by wind-energy...
Its about time the energy consumer was treated more fairly, not treated as a resource to be exploited and ripped-off by left, right and centre...
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Sunday Telegraph Columnist making similar point:
http://tinyurl.com/5wqxxba
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Here are the facts about wind power.
This table showsgeneration by fuel type.
As I write, wind power is 1.1 % of UK total supply.
I have never seen it more than 1.5%.
Wind power is a vanity project for MPs who want a visible sign of enviro activity. It will never provide reliable energy for the UK. Never.
It relies on other fuels to take up the load when the wind stops blowing or blows too hard. This is easy when its less than 2% - but imagine suddenly losing 20 or 30% of your supply.
Looking back in history - people built windmills only where water mills could not be built. As soon as steam power came along they dropped both water and wind and built steam engines to power their mills and factories. They wanted reliable and cheap power.
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Wind mills are attractive to speculators who want a slice of the subsidies. All you need is a bit of land and a husband in Downing Street...
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Good Morning Andrew,
I think that you are being very hard on the government. It should be understood that anti-competitive subsidies to companies are not allowed, so a wheeze has to be found. Some way around the problem, under advice from some very expensive consultants, and lawyers.
This is no different to MPs expenses, can't raise your pay, give you larger expenses. For the bankers it was, can't give you a huge wage packet, we'll give you bonuses instead.
As we now see in France with the upcoming trial of Chirac over corruption, as we see with Berlusconi in Italy over his problems, and Andrew with his problems, eventually, when the truth starts coming out the politicians run for cover. No, we do not have a subsidy for wind turbines, we just allow the companies to charge more. It always was a scam, well that's what I think, and we know from what you say that Whitehall Departments read your blog that eventually the truth does come out.
The next thing we'll be told is that it wasn't Special Forces in Libya, it was a private security firm who supplied the men to provide the protection. I don't know Andrew, you just seem to light the touch paper, and then watch the fireworks go off. What is they say, 'The truth is out there'.
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Their contempt for us is total. End of...
Thank you for following this up, Mr.Neil. I expect Mr.Hammond will be releasing an apology shortly for misleading the public or being woefully ignorant about his job.
I like Mr Dobbs theory. Let us "stabilise" bread prices for the forseeable future by making us all pay £20 a loaf.
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Yep, thats a subsidy. You need to shout louder about this type of stuff, otherwise the politicos will think that all they've got to do is keep the head down for a couple of days until it blows over, if you pardon the pun.
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Andrew,
Good work - as ever. (You can't keep an old hack down!)
These continual lies from politicians need somehow to get them jailed. It's a disgrace. Until a means to create laws covering politicians that aren't MADE by polititicans we're always going to suffer their vile whims. We need measures that rightfully 'bang up' people entrusted with governing when they lie. It's utter robbery.
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'The methanes from spiders cause more global warming than anything else.'
(Johnny Ball)
Only one thing worse than a climate change scaremonger. An unbalanced climate change denier.
Andrew, you're with the luddites on this one.
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BG@17
I gather our host's red hair dye is not exactly environmentally friendly either.
For some reason this is Andrew's hobby horse knocking the climate change lobby but with instability in the oil producing regions alternative energy sources are more important than ever.
Whether we continue pursuing these alternatives from a climate change perspective or because it makes sound long term stategic economic sense does not bother me but burying our heads in the sand will not make the problems go away.
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The wind turbines would probably be more economic if we had used the British designed ones that can operate when the weather conditions are very windy. Nope, wechose (sorry the extremely clever politicians chose) those made in Scandinavia that cannot be used in very windy conditions.
The company that made the British ones shut up shop over a year ago and moved their factory from the Isle of Wight to the USA where their biggest market lies. Channel 4 or Channel 5 had TV reality series about erecting wind turbines in the mid west in twister country, and in high winds you see the contribution they made to US energy needs.
The UK has a perverse record when it comes to actually implementing green technology in that whatever is decided tends to be ineffective or produces a poor return on investment. Why the offshore wind farms are on the breezeless east coast and not off the windy west coast beats me. Any government action seems to have an end goal of oushing more cost to consumers in the form of higher energy bills: smart meter installation is to be paid by us, but are they really needed?
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Good Afternoon Andrew,
talking of wind I think that there may well be a gale blowing your way, if the lovely Anitas face is anything to go on when you made reference to Boris Johnsons wife. Maybe your programme needs the same moderators as we have so as you might ever so slightly over-stepped the mark. Slightly off topic I would have thought. But, it did make me smile, very broadly. I need cheering up, been a bit despondent lately, what with the chill wind not blowing down here.
The problem is that there is no wind, yet it is cold, so where do we think we can get all this energy from in respect of wind turbines. Ask the Met Office and they will tell you that this has been the quietest winter for years in respect of wind power, there is no wind.
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"18. At 11:23am on 07 Mar 2011, meninwhitecoats wrote:
For some reason this is Andrew's hobby horse knocking the climate change lobby..."
Climate change is irrelevant here. A Government minister appears to have told a porky and no-one has yet come on here to say that what he said is correct. You seem to have no trouble with that.
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@21 Roland
Untruths are never acceptable but our host is more liable to jump on those of the climate change lobby than those of other groups. He has form on this issue.
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What they should harness, is all the hot air spoken on this subject, that would keep us warm for sometime. The only deniers, are those that deny that all this climate change is just a load of old tripe. The only green issues worth pursuing are how to cut the population of the World, that is eating up the Global resources. Nothing else will make a blind bit of difference, unless we all go back to living in mud huts and farming the land.
Its all a money making scheme for Governments and scientists who want the extra resources by supporting this nonsense. Children are indoctrinated in school with all this, and frigntened to death by being told that only by certain actions will they ensure their future. It is another example of how populations can be led by the nose.
The real cost for the future will be in having to dismantle these giant ugly windmills, when it is proven they are useless.
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21. Roland D wrote:
'Climate change is irrelevant here. A Government minister appears to have told a porky...'
There's a first.
No, Andrew is absolutely right to highlight these alleged misrepresentations.
Equally he should be giving the same scrutiny to both the CC naysayers and scaremongers.
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23 Susan
"The only deniers, are those that deny that all this climate change is just a load of old tripe. "
Open minded as ever.
Can you not see any economic sense in pursuing a green agenda? Promoting energy efficient buildings [mud huts or those of wattle and daub are favoured these days], reducing our reliance on oil, exploring sustainable energy production - what is the harm in looking at these?
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coats 25
It is yourself who is not open minded, especially with your obvious lack of tolerance with regard to how people look. I did note your usual cruel remarks at 18.
These things are not being explored, they are being rammed down our throats in school and enacted in policy. It inevitably means that it is always the public who end up paying more for everything. It is all useless hot air, unless the population of the World is brought under control. This is not happening because Governments want ever more work horses to produce tax.
Certainly these windmills springing up all over, will solve nothing, and will merely be a blot on the landscape.
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23. Susan-Croft wrote:
'Its all a money making scheme for Governments and scientists who want the extra resources by supporting this nonsense. Children are indoctrinated in school with all this, and frigntened to death by being told that only by certain actions will they ensure their future. It is another example of how populations can be led by the nose.
The real cost for the future will be in having to dismantle these giant ugly windmills, when it is proven they are useless.'
By the same token you could say that anti-climate change opinion is part sponsored by vested interest groups like oil companies, 'leading populations (public?) by the nose', and in the future we'll be having to dismantle ugly oil-rigs and cranes. When fossil fuel runs out.
Don't disagree with the implications of population growth and related problems like fresh water and food shortages. Not sure how denying our contribution to climate change will help those.
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Blame 27
You well behind the curve on these issues, much money has been spent by oil companies on dealing with abandonment of oil rigs and platforms. This is money spent to find the best way to deal with this issue for the environment. To this end many successful projects have been enacted.
You have no proof at all that climate change is man made, therefore you are not in position to call anyone a denier. What is sure, however, is that the population is eating up the World resources, and shortage of food and water will be a problem for the future. These are the issues that should engage Governments. Only by population control can any difference be made.
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Yes it does, doesn't it.
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Good afternoon each & Andrew.
If the cost of electricity is front loaded for the (supposed) benefit of all at some time in the distant future. Why is the first portion of the bill set at a higher rate than the subsequent wattages?
To benefit all right now and to penalise those who use the greater amount: Those that are in the habit of leaving lights on, using garden/patio hot-tubs and decorating their houses with Santa and his reindeer for part of the year.
The charging regimen should be reversed post-haste.
As I have said the thrust of this Global Warming stuff is to line the pockets of the few while the public is yet mug enough to swallow the lie.
Small is beautiful, profligacy has to curtailed. Yes, yes and yes again.
The benefits should be real from the get-go though.
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Susan
If climate change were completely off the agenda, surely a good economist would recognise the arguments for looking at means of being energy self sufficient, having depleted many of our own natural resources, so that we have a stable energy market not subject to wild fluctuations at times of unrest.
Also developing cleaner sustainable technologies that improve our environment, less pollution better air quality etc = generally a more pleasant place to live.
The general controversy around MMGW tends to obscure the fact that many of these innovations are worth pursuing in their own right.
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There would never have been an industrial revolution if people worried about the initial investment. It's progress. What matters is if it generates more power than it uses.
Note the greens are useless at answering this question. But then they are rapidly declining across Europe.
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28
Valid points on the scarcity of resources in terms of arable land and water. What is being overlooked by the environmentalists is the non CO2 pollution that is killng off ocean life (mercury poisoning to satisfy the avarice of the rich wanting more gold) as many people depend on fishing for food.
The water problem is one of distribution. Lake Chad is at a dangerously low level and crucially supplies the water to keep the central Africa eco system ticking over. Las Vegas is in a similar perilous state, but the recent rains in Australia show the problems facing mankind.
What is odd is that we can have great leaps in technology in areas like computing over the last few decades, yet advances in water desalination plants or solar power have been insignificant. The UK government opts for wind turbines yet tidal power research shows far greater potential, so the Portuguese government has happily endorsed this Scottish invention.
Why dont British politicians support British reaearch and development?
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Suggest a letter to Mr. Hammond - mine is copied below. Incidentally the price the wind developers receive for each ROC can be significantly higher than the price the electricity is sold for per unit. A rule of thumb is that if the ROC is included we pay more than double for onshore wind and more than treble (they get double ROCS) for offshore wind vs gas / coal / nuclear. Electricity consumers paid onshore wind farm owners £1.3 BILLION last year in ROCS = subsidies = profits.
Dear Mr. Hammond,
Your comments on the Daily Politics Show regarding the financing of
onshore wind power - "On shore wind does't need subsidy, on shore wind
can pay its way" - are ridiculous. As a Minister one would have hoped
that you would be aware of the Renewables Obligation Certificate / Feed
in Tariff Schemes which we all pay for as electricity consumers through
our bills. The exact amount is of course hidden as your Government, as
with previous Governments, does not want us to know how we are paying
the grossly obscene profits to the owners of these wind farms. The
current amount stolen from the many and given to the few is £1.3 BILLION
in subsidy per year and rising every year to meet the flawed EU targets.
If you genuinely believe that onshore wind does not need subsidy then
please lobby to have the ROC & FIT schemes removed and let wind stand on
its own. We will see how many wind farms are constructed - zero!
Offshore is even worse where double subsidies are provided.
Denmark, Germany, the Netherlands and most recently Spain, have all
admitted that wind power (and solar) doesn't work; it only contributes
to higher electricity bills and does little to provide energy security.
Denmark's production of CO2 from electricity generation has hardly
changed despite installing 8,000 wind turbines. The Netherlands and
Spain are quite rightly reducing subsidies for renewables recognising
that they do not provide any benefit to anyone other than the developers
through the various subsidy mechanisms.
What is incredible is that successive Governments, including your own,
do not seem to understand the issues with wind power and how the
emphasis on encouraging it through subsidies is not going to help our
looming energy crisis one bit. As an engineer it is obvious that a wind
energy policy is fundamentally flawed, as an electricity consumer I
object to paying money to wind and other renewables companies in
subsidies, as a citizen I think it is immoral the way your policies are
contributing to fuel poverty in this country.
I have copied this e-mail to our two local MPs, both Conservative, for
information.
I voted Conservative at the last election - believing that you would do
something to address this ridiculous situation which was a hangover from
the last Government.
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28. Susan-Croft wrote:
'You well behind the curve on these issues, much money has been spent by oil companies on dealing with abandonment of oil rigs and platforms. This is money spent to find the best way to deal with this issue for the environment. To this end many successful projects have been enacted.'
Long overdue, and a bit like tobacco companies belatedly spending money on educating people on the hazards of smoking but still flogging cigarettes.
Like the development of non-fossil fuel transport, held up by lobbyists and legislation for decades.
As for man-made climate change, I'm not one of the scaremongers but I believe there is enough empirical data, not from alleged grant or subsidy driven scientists, but the scientific community as a whole, to indicate that we are in the process of upsetting the balance.
ecb @33 rightly mentions non-CO2 pollution killing off ocean life but increasing atmospheric CO2 is acidifying the oceans as well.
Just as climate change became trendy the reverse is now true, anti-science is becoming fashionable. Mostly amongst right wing conservative groups like the GOP and the Tea Party in the US. Perhaps it's the word 'change' which is the problem.
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coats 31
By the same token a good scientist should question rather than assume answers, merely to gain more funding. Whilst at the same time calling other scientists, deniers, because they do not assume the same.
Nothing Britain can do will make the slightest difference to Climate Change in World terms, even if the science could be proved. What would make a vast difference to improvement in life chances for all, would be a population cull. This would see not only more living space for everyone, more open spaces, less pollution, more food production, less use of resources etc. Nothing else will make any difference. The resources of the World are running out so quickly, that CC is of no importance, even if it could be proved it is man made. The main reason it cannot be proved, is because it is simply not true.
It is absolutely ouragious, particularly in these times when people and business are so squeezed already, to introduce policies which will cost the public more money, on something that has not been proved at all.
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Blame 35
Don't be so daft, do you believe politics dictates whether people think for themselves or not. Many people are questioning because there is no evidence to support the claims being made. When has it ever been sensible to make policy on unproven science. I could just as easy say the left peddle this sort of thing because it suits their agenda.
The fact is it does not really matter what you believe, the World will not be able to feed its vast amount of people, long before climate change, if it were true would be a problem anyway.
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37. Susan-Croft wrote:
'Don't be so daft, do you believe politics dictates whether people think for themselves or not. Many people are questioning because there is no evidence to support the claims being made. When has it ever been sensible to make policy on unproven science. I could just as easy say the left peddle this sort of thing because it suits their agenda.
The fact is it does not really matter what you believe, the World will not be able to feed its vast amount of people, long before climate change, if it were true would be a problem anyway.'
A population cull. That sounds very 'Tea Party' to me. Where would you start, Susan? Africa? Gypsies? :)
For a snapshot go to Wikipedia for a list of relevant organisations and societies who concur with the proposition that there is a 90% or greater chance that human actions are the cause of global warming. Then look at the list of those who remain neutral (a few) and those who don't concur.(0?)
Obviously the absolute extent of humankind's effect on climate change or GW has not been proven 100% conclusively but the consensus of those who are most likely to know is overwhelming.
Call me impetuous but I'd put more store by eminent scientists, geologists, physicists and climatologists than ex-children's presenters.
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36. Susan-Croft
coats 31
'By the same token a good scientist should question rather than assume answers, merely to gain more funding.'
How on earth do you think the slew of 'good' international scientists, geologists, physicists and climatologists I refer to in #38 made their deductions???
By examining samples going back to the ice age, checking all comparative data since first recorded, analysing all possibilties... or was it on a whim?
Maybe it was rock, paper, scissors.
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@39
It's perplexing that perfectly sensible people refuse to accept any evidence on this issue, which may affect their lifestyles.
....and then there is Susan
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#40
I'm guessing that there because there are some chancers in the field of scientific climate research and that some alternative energy technology is questionable or has been badly implemented that this somehow wipes out all empirical or evidential based research on climate change.
I suppose Darwin and Galileo had to go through all this.
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Don't you just love this blog! From subsidies for wind turbines to the need for a world population cull in two days. Serendipity or serene dippiness?
Think I prefer Menin's keep your powder dry and cover all possibilities approach.
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