Monday, March 14, 2011

Andrew Neil nails Hammond lies on the cost of Windfarms

In a magisterial blog Andrew Neil picks apart claims by Philip Hammond that,
"onshore wind [turbines] doesn't need subsidy anymore, onshore wind can pay its way."
The thing is that Hammond's lazy claim is just one of many from this government. They have such a brainslack approach to renewables that they say anything, with or without evidence and expect to be believed.

The problem is that Andrew Neil smelt a rat.
Well, we've heard nothing from Mr Hammond's department but this is what we've had from the Department for Energy and Climate Change:
“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.”
The first sentence is irrelevant to Mr Hammond's claim.

The second would suggest that onshore wind is so cheap and so plentiful that there is no need to subsidise it.

The third sentence confirms that there is indeed a subsidy to onshore wind turbine operators via the legal obligation of electricity companies to buy electricity at artificially high rates (and then pass on the extra cost to us, the electricity consumers).
I think that Mr Hammond has, as they say on t'interweb, been owned.


Dick Puddlecote said...

That deserves a wider audience, I'll pop it on my Saturday round-up. :)

Anonymous said...

It has been said, of some of the windfarms and individual owners in California, USA, where huge swathes of windmills cover entire peaks from the Altamont Pass area in the north to the Tehachapi Mountains in the south, it was the tax credit subsidies and business deduction allowances that were the only thing to make them attractive as investments.

And once up and running, many decades on for some of them, some have fallen into disrepair or require constant upkeep, such that they don't really generate a constant supply, even with steady winds, only because they break down so often.

And like with other tax credit subsidized and business deduction laden schemes, such as housing a good example, they might fall into shambles and not produce a profit, but the investors in many instances are those who require large paper losses, including depreciation, which they can then carry over to other income areas, thus reducing personal income tax liabilities.

If that be the case, at least in some instances of investment, then that makes wind-farm investing schemes with their enormous tax benefits similar to those who would invest in real estate properties for rental purposes, but then let the properties disintegrate into disrepair, caring more about the tax write-offs than the slums created out of neglect.

That would therefore put some wind-farm investments on par with slum lords, in that sense.

But at least with slum lords, they don't go around making an issue trying to draw attention to the hovels they've created as opposed to creators of wind-farms which try drawing public acceptance by use of propaganda claims they are "going green", "saving the planet" and goodness wrapped in virtue - when in fact, some are just tax write-offs and nothing more.

Mike Wood said...

Hammond should obviously have said no government subsidies. I know that it will sound like dissembling but the RO is usually seen as a support mechanism rather than a subsidy because there are no payments from the Government.

As you probably know, despite the name, electricity companies aren't obliged to produce renewable energy but have to pay £37 for every MWh that they fall below the quota. That money is then split between those companies that do meet their quota in proportion to how many credits they have gained. You get 1 credit for generating a MWh from onshore wind, 2 credis for a MWh from offshore wind and 0.5 credit for some technologies like fuel from burning processed sewage.

The whole RO system is much too expensive and does need to be replaced.

As you know, I'm in favour of increasing the amount of energy produced from renewables but don't think that onshore wind is a viable or desirable way of doing this.

The Private Members Bill being proposed by CH-H, AG and others, which would stop wind farms being built within 2km of residential propertes is due to get its 2nd reading in June.

Salv said...

UKIP has the only credible energy policy. Sorry guys coal and nuclear are the only long term future that guarentees our own energy security. Keep up the good work re this blog.

Gawain Towler said...

Mike, interesting and I hope that C H-H et al. succeed.
There again I would suggest that though the ROs are 'seen as a support mechanism', that is splitting hairs. No they don't get money direct from the Government, they get money direct from the consumer, and the consumer has no choice as the mechanism was created by the Government. So should we call the ROs as arms length subsidies, a sort of Quasi Governmental Monetary Insertion Renewables Excuse or QuaGMIRE for short?