August 28, 2011
Scotland, U.K.

Cut looms for wind turbines in subsidy switch

By Jenny Fyall, Environment Correspondent, Scotland on Sunday, scotsman.com 28 August 2011

ScottishPower is planning to pull the plug on more than 1,000 onshore wind turbines if the Westminster government cuts millions of pounds of subsidy from the industry.
The Department of Energy and Climate Change (DECC) has launched a review of taxpayer-funded subsidies that is expected to lead to the payments being switched to giant offshore wind farms.

A report commissioned by ScottishPower reveals that a quarter of onshore wind farms planned for the UK could become uneconomic if financial support is cut by an anticipated 25 per cent.

Of these, more than 70 per cent are in Scotland, which would mean the equivalent of about 2.3 gigawatts of wind power going unbuilt – some 1,080 average-sized turbines; almost as much as the wind power currently installed.

Any attempt by the government to save taxpayers’ money by slashing onshore wind subsidies could backfire – eventually costing the public more than £200m extra a year by 2020, the report says. This would result from renewable energy developers turning their focus to more expensive offshore wind farms, which attract higher subsidies.

Developers of small, community-based wind farms say they also fear the subsidies on which they rely will be cut.

Such a savage reduction in onshore capacity would, experts say, undermine the Scottish Government’s intention to meet all electricity demand north of the Border from renewable sources by 2020.

The DECC said its review aims to ensure that the huge subsidies to the booming renewables industry are spent on investing in the right technologies. Onshore wind is now seen as a mature industry capable of generating profit with less financial support.

The report commissioned by ScottishPower, one of Scotland’s biggest investors in onshore wind, examines a reduction in financial support of between 10 and 25 per cent.

Banding scenarios; impacts on onshore wind deployment, by Oxera Consulting Ltd, says: “Any reduction in onshore wind banding is likely to reduce onshore wind deployment. Substituting this with increased offshore wind deployment would lead to a significant increase in costs.”

Oxera calculated that a 25 per cent reduction would make a quarter of planned UK onshore wind farms uneconomic and cost the taxpayer up to an extra £256m a year – through additional subsidies to offshore farms – by 2020.

Keith Anderson, renewables director at ScottishPower, said: “To meet our challenging carbon reduction targets it is essential Scotland and the UK get the most from our abundance of renewable resources.