The full extent of the subsidies for wind farms received by the “big six” energy companies can be disclosed today.
An analysis of the industry’s figures shows that Britain’s largest energy firms received almost £900 million last year through a consumer subsidy added to household bills.
The subsidy is worth £200 million more than the income from the electricity actually produced by Britain’s on and offshore wind farms. In total, the big six received more than £1.5 billion in revenues last year from wind farms they own.
The scale of the revenues will anger critics who claim subsidies for wind farms are excessive.
Their dismay will be compounded by above-inflation increases in energy bills expected this winter. Last week Scottish & Southern Energy (SSE) announced an 8.2 per cent rise in domestic fuel bills with the rest of the big six expected to follow suit.
Alistair Phillips-Davies, the chief executive of SSE, blamed green energy levies, which include the wind farm subsidy, for already adding £110 to the average household fuel bill before the rise took effect.
SSE received £213 million in consumer subsidies from its fleet of on and offshore wind farms. Its total income from wind farms was in the region of £373 million.
With low running costs, the surplus made from operating its wind farms is calculated at £277 million.
The study carried out by the Renewable Energy Foundation (REF), a think tank, coincided with SSE’s announcement of a rise in bills.
The subsidies were introduced by the Labour government to encourage investment in the wind industry, in part to meet strict European Union green energy targets.
Opponents complain that wind farms are expensive, blight the landscape and provide only intermittent electricity, meaning old style power stations will still be needed on days when the wind is insufficient.
Dr Lee Moroney, REF’s principal analyst, said: “Successive governments’ policies have provided generous, low-risk and long-term rewards at electricity consumers’ expense to incentivise the very rapid deployment of wind deemed necessary to meet EU targets.
“The targets are misguided, the rewards are excessive and the ever-increasing burden on consumers is iniquitous. Surely, it is time common sense prevailed.”
Under present rules, onshore wind farms receive about half their income through the consumer subsidy and half through selling the electricity they produce while offshore wind farms receive a subsidy twice the value of the electricity they generate.
REF says evidence of how generous the payments are is demonstrated by the discovery that one wind farm in Fairburn, near Inverness, owned by SSE, had underestimated the size of its subsidy for 16 months because of faulty meter readings.
REF says subsidies are so generous that the company did not notice when £2.5million was owed.
Energy companies deny profits from wind farms are excessive and insist the subsidy is necessary because start-up costs are so high.
London Array, off the south-east coast, is the biggest wind farm in the world and has 630 megawatts capacity – enough to power 500,000 homes – but cost £1.8 billion to build.
Dr Gordon Edge, the director of policy at RenewableUK, said: “It’s simply untrue, and not looking at the full picture, to state that because the running costs of wind generators are low, excessive profits are made.”
Dr Edge said the “very significant outlay” on building wind farms meant “it can take a long time before you actually start seeing any profit”.
He added: “It is ironic that our opponents attempt to turn one of the advantages of wind – its low marginal cost – into an attack.”
|Wind Watch relies entirely
on User Funding