Too Much Wind
Glen Newey
It’s an ill wind that blows no jobs. The recent storms in north Britain have spotlighted Scotland’s plans to grow into a wind economy in the years to come. Alex Salmond, as head of the SNP government, has pledged to meet all of Scotland’s electricity needs from ‘renewables’ by 2020, and that plan rests squarely on wind.
Salmond enthuses about Scotland’s ‘unrivalled green energy resources’. One thing that everyone agrees on, even ignoring the first minister’s own contribution, is that Scotland has a lot of wind. Fairly obviously, if you’re trying to generate electricity from wind, you can have too little of it. A report published in March for the John Muir Trust found that the average output from UK turbines amounted to only 24 per cent of metered capacity in 2008-10, and to no more than 5.5 per cent of capacity at the four peak demand periods in 2010. You can have the wrong sort of wind, if it is too squally for generating purposes. But you can also have too much wind, with sometimes spectacular results, as Thursday’s ‘Hurricane Bawbag’ showed. This means, surprisingly often, that the supply has to be shut down.
In September the Norwegian firm Fred Olsen Renewables received £1.2 million to keep the Crystal Rig II wind farm inactive for eight hours after high winds shut down the plant. Fred Olsen, which owns Crystal Rig, had demanded £999 for each megawatt hour that the turbines would have generated had they been switched on, and the National Grid duly paid out. The National Grid is privately owned, but plainly the cash doesn’t come from nowhere. In fact, as often these days, people get to pay twice, once as taxpayers via subsidies to private business, and once as ‘consumers’, impotent plenipotentiaries stumping up higher fuel charges. The trouble is that although the average turbine barely generates enough power to run a medium-sized vibrator, suppliers benefit from the feed-in tariff regime, whereby smaller wind farms get paid per unit generated, up to £413 per MWh. This enables speculators to up the price payable to landowners, before selling on the right to develop with planning permission at a tariff-inflated price. Local nimbies are bought off with promises of ‘community benefit’.
Bigger wind-farm owners can from Renewables Obligations Certificates. ROCs have increased the profitability of renewable energy, as the certificates have an additional value over and above the price of electricity. Supply firms need to meet their contracted quotas for renewables generation under current UK government rules, and they can buy ROCs in partial fulfilment of this obligation. This in effect makes ROCs into vouchers awarded by the government to ‘green’ energy producers, redeemable against payment by the power companies.The ROCs’ cash value is determined by auction; they currently trade at around £47 per MWh. Again, the money has to come from somewhere – in this case, from power suppliers’ ‘customers’. On the latest estimate (2009), more than 18 per cent of UK households suffer fuel poverty. For Scotland, the figure is to 33 per cent.
Salmond knows that there’s not yet a majority for seceding from the union – the latest Ipsos MORI poll suggests that a decisive majority (57 per cent to 38 per cent) still opposes independence. Accordingly, the first minister has kicked the independence poll to the end of this parliament, though most Scots also want to get it over with. His independence-lite strategy vaunts the supposed energy bonanza that awaits after independence – a green one, unlike the fossil fuels swiped by the UK exchequer in the 1970s North Sea oil boom. But Salmond will be badly exposed politically if the price of freedom is a big hike in energy bills. Polls suggest that people will vote for separation only if they stand to make money from it. Meanwhile, a Citigroup report last month suggested that the SNP renewables targets would commit Scotland to a £4 billion annual subsidy by 2020, adding £900 to household energy bills.
Comments
Within easy reach of Edinburgh, the Lammermuirs are (were) arguably the most beautiful and tranquil area of unspoilt landscape in Southern Scotland. Now it is turning into one huge industrial park.
These Wind power stations (I can't bring myself to use the contrived marketing term "farm") are taking up literally hundreds of square miles of Scotland's precious resource: namely its landscape.
As each month goes past I watch large swathes of scenery being destroyed, I see electricity bills rise as we contribute to the subsidies enjoyed by the developers and I see rich landowners become increasingly richer by lending their land for turbines. So somebody, please show me the benefits -- the improvement in climate change -- the conventional power stations that have closed down as a consequence. I need convincing.
If you would like to compare the subsidies we pay to the many fossil-fuel industries, both directly and indirectly, with what we pay for the wind turbines that provide energy without producing greenhouse gases in exactly the way coal doesn't, and then argue that we shouldn't subsidise wind power, be my guest. Go on - I need convincing.
Subsidies like Feed-in Tariffs exist because innovative technologies are often commercially inferior to existing technologies. In the early phases, steam engines had no great advantages over water and wind power, steamships were inferior to sail (and coexisted with sail for a century), jet engines were less efficient than props, etc. The general case is that new technologies become fully operational and competitive only after incremental improvements that may take many decades. During this time they tend to need either subsidy or some other kind of patronage that protects them from the competitive advantages of the dominant technology. One answer is to set up a subsidy that encourages adoption of the new technology, but declines over time, thus encouraging development and innovation in the technology. At the end point the new technology should be competitive.
This is a big problem now because we have dominant hydrocarbon technology that is vastly more efficient than any potential alternative, but has a big external cost. If climate change is the problem that the scientific evidence overwhelmingly suggests, then we need alternatives. But we don't have them - they must be developed and diffused. The history of technology suggests there will be no move towards low-emitting energy without development subsidies, possibly large ones, and possibly very long-standing. Designing subsidies that decline over time is a tricky business because the time path of improvements in renewables is at best difficult to estimate.
It may be that renewable energy sources like wind and solar power will never compete with hydrocarbons. But without subsidies now we won't know.