Outdated UK Onshore Wind Policy Could Cost £1 Billion
An unwritten UK Government promise of “no subsidies” for onshore wind is blocking potential development of the cheapest form of new electricity generation and could end up costing more than £1 billion over the next four to five years relative to other technologies.
A new report from the Energy & Climate Intelligence Unit (ECIU) investigates the de facto policy ban on onshore wind, whose development was curtailed during the final years of the Coalition Government under former-Prime Minister David Cameron, and effectively banned after the 2015 General Election when the Conservative Party promised that onshore wind would receive no subsidies. The report outlines reasons why the UK Government may want to revisit onshore wind as a new source of electricity generation, especially given the recently announced Clean Growth Strategy.
The ECIU published its new report this week, Blown Away, which comes just in time to precede a Government-prepared review of energy costs in an effort to seek the “lowest energy costs in Europe” and a week or so after the UK Government published its Clean Growth Strategy, which will both seek to grow the national economy while cutting greenhouse gas emissions and simultaneously distribute in excess of £2.5 billion worth of investments to support low carbon innovation from 2015 through to 2021.
Blown Away specifically highlights the dramatic cost decreases seen for onshore wind over the last few years, where now electricity from 1 GW (gigawatt) of new onshore wind farms would cost £30 million per year less than it would cost from offshore wind — one of the technologies deemed appropriate to receive subsidies by the UK Government. More strikingly, 1 GW of onshore wind would cost £100 million less than electricity generated from new nuclear or biomass plants — also technologies rewarded with Government subsidies. Onshore wind is also cheaper than high-carbon gas generation, according to the ECIU.
Overall, the ECIU determines that allowing the de facto onshore wind ban to remain in place and unremedied will cost £1 billion over the next four to five years relative to other technologies.
“The effective ban on the cheapest form of new power generation looks increasingly perverse,” said Richard Black, director of the ECIU.
“For a Government committed to making energy cheaper, this risks not only locking people into higher bills, but also runs contrary to its aim of having the lowest energy costs in Europe. These blustery isles have no shortage of wind and while other European nations are going large on onshore wind the UK is starting to fall behind by not making the most of our natural resource.
“David Cameron promised no new subsidies for onshore wind. But it now doesn’t need a subsidy – research indicates fixed-price contracts would more than pay for themselves. So, given that the government also knows it needs new low-carbon policies the question is, why not enable onshore wind where local people want it and where it won’t harm wildlife, while continuing to support a healthy mix of other low-carbon energy generation?”
The recent cost decrease for onshore wind has been demonstrated repeatedly throughout Europe, with projects being agreed to at costs below the UK’s current wholesale electricity price thanks in part to improved onshore wind technology and larger turbines, as well as the inevitable maturation of the onshore wind industry. As a result, onshore wind does not necessarily need subsidies, but the authors point out that “most developments would still need centrally-agreed fixed price contracts; and while these are available to biomass, nuclear, offshore wind and a few niche technologies, new onshore wind farms remain excluded.”
Legacy UK government policy is therefore precluding the UK from building the cheapest generation technology available,” the authors conclude.
The millions of pounds being put at risk by allowing onshore wind to be effectively banned may even be worse than presented in the report. The scenarios presented by the ECIU “are based on currently-available turbine technology, and thus are almost certainly an under-estimate,” given that new technology innovations are continually being made. Onshore wind turbines are becoming larger and more efficient, and many projects on the European mainland are being agreed at subsidy-free. Further, “Planning regulations mean that the UK already has among the least efficient fleet of onshore turbines on the continent, and we are currently projected to fall to bottom place.”
Another interesting point highlighted by the ECIU is that “since the 2015 election is an increase in public acceptance of onshore wind among Conservative voters.” The public perception of onshore wind was for a long time a big deal for politicians, but Conservative voters are less hostile towards onshore wind now because it no longer requires a Government-funded subsidy.
“Changing tack on onshore wind would be widely supported,” explained Dr Jonathan Marshall, ECIU energy analyst.
“People are overwhelmingly in favour of renewable forms of energy, and onshore wind is one of the most popular forms of generation; surveys show that people are far keener on living next to an onshore wind farm than a fracking site or a small nuclear reactor.
“The opportunity of repeating the British success story on offshore wind should also be a powerful motivator, and there would be added benefits in diversifying the UK’s energy mix. A policy rethink on onshore wind looks increasingly overdue.”
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