Wind power adds £45bn to cost of climate targets 

Britain could meet its climate change targets in 2020 for £45 billion less if it abandoned wind power in favour of cheaper gas-fired power plants and nuclear reactors, an independent report has found.

The saving would rise to £150 billion by 2050 because of the huge costs associated with building and running the proposed 32,000 wind turbines.
The study was supposed to be published last year but was killed by its sponsor, KPMG, one of the government’s closest advisers on energy policy, after some of the findings leaked, provoking an outcry from the wind farm industry.

AF Consult, the firm KPMG commissioned to do the work, will tomorrow publish the analysis in the interests of presenting an “independent” perspective in a debate “led by groups with vested interests”.

It says that Britain could hit its 2020 pollution reduction targets set by the European Union without building a single additional wind farm. A combination of new nuclear plants and gas-fired power stations, which emit far less carbon dioxide than the coal-fired plants they would replace, would deliver the required cut to pollution, it claims.

This would cost £24 billion, or £45 billion less than the £69 billion price tag envisaged under government plans that also include a big increase in renewable power. The difference balloons to £150 billion by 2050 because it avoids the high cost of building renewables and the subsidies required to pay back developers.

Clare Spottiswoode, who was head of the gas regulator Ofgas in the 1990s and has close ties to the nuclear and oil industries, endorsed the findings: “If we are concerned about cost, then renewables have no part to play in reducing greenhouse gas emissions by 80% before 2050.

The findings will fuel the debate about government policies that put wind power – the most expensive form of power generation – at the heart of a programme to remake Britain’s ageing energy infrastructure. George Osborne warned last year that he would not support policies to “save the planet by putting our country out of business”.

The pressure on David Cameron to row back on subsidies for the sector, which are among the most generous in the world, has increased as austerity bites. Last year the number of “fuel poor” households, those where more than 10% of income goes on energy bills, was revealed to have hit 5.5m in 2009. The increase came after the average annual household bill hit £1,345, caused by high gas prices and green subsidies.

Britain has signed up to two Brussels targets. The first is a pledge to cut carbon dioxide emissions by 34% from 1990 levels by 2020 – and 80% by 2050. The second is a near-fivefold increase in renewable energy. Last year, 3.3% of the UK’s total energy was renewable, a long way from the 15% set for 2020. Most of the burden for the latter will fall on the electricity sector, where the share of renewables is set to increase from 7.4% last year to 30% by 2020. If Britain misses the target, it could face EU fines.

The wind industry is booming. Last year farms with 726 megawatts of capacity – enough to power 390,000 homes – were built, a 12% increase on the year before. The rise was driven by a subsidy scheme that pays double the wholesale power price to owners of onshore plants, and triple for offshore producers.

In 2010, the last year for which data were available, the scheme paid out £520m. The biggest share went to the big six utilities, who own the largest installations.

Britain does not have a domestic wind turbine maker. The vast majority have been shipped over by Siemens, the German engineering giant, and Vestas. The Danish firm is the world’s largest turbine maker but plunged to loss last year as countries that have been big supporters of the technology slashed subsidies.

Britain, however, is pushing ahead. If we follow through on plans to electrify transport, British waters and countryside could be carpeted with up to 32,000 wind turbines, according to industry sources.

The industry’s backers hit out at AF’s analysis. The Department of Energy and Climate Change said its “assumptions are so flawed the conclusions are near pointless”.

It said AF’s model failed to take into account the need for a diverse range of energy sources, the jobs a domestic industry could produce and the importance of security of supply. AF’s model also assumed the widespread use of carbon capture and storage, a technology that has the potential to strip carbon dioxide from power plant exhaust but remains unproven.