July 15, 2015
Scotland

Economist claims consumers bear £1billion wind farm brunt

Written by Ian Ramage | 15/07/2015 | www.energyvoice.com

A leading economist has claimed consumers have paid a £1billion subsidies penalty – to deliver soaring profits to windfarm operators.

Inverness-based Mackay Consultants said analysis of economic impact and feasibility studies for turbines schemes revealed that electricity customers were ultimately billed for three times the amount required to help build them.

Company Tony Mackay claimed official statistics showed the payments – through renewable obligation certificates and feed-in tariffs – for windfarms across Scotland totalled £1.36billion over the past eight years.

And he estimated that most schemes would have been profitable with a subsidy of barely a third of that – somewhere in the region of £475million.

He said: “I believe that on average the level of subsidies for windfarms is an estimated 2.8 times what was actually required for the facilities to be built.”

Mr Mackay said the result was “extraordinary” rewards for developers – or in economics jargon, “supernormal profits”.

“The two main benrficiaries of the supernormal profits have been the companies involved and the landowners,” he said.

The former include a number of small companies and community groups, but the main winners have been large companies such as Scottish Power and SSE.

Mr Mackay added: “A common feature has been smaller companies obtaining planning permission for windfarms and then selling that on to the larger ones.

“It is likely that the generous subsidies have resulted in a bigger growth in windfarm capacity than would otherwise have been the case. However, I believe that has not happened on a significant scale.”

Mr Mackay said electricity bills were about 10% higher than they would be without the scale of subsidies.

The industry disputes that figure, citing Scottish Government statistics which put it at 7%, and the UK Government has decided to halt the payments in April 2016, a year earlier than planned.

Joss Blamire, of trade body Scottish Renewables, said: “The renewables obligation has already been cut by 10% in recent years.

“The future trajectory for onshore wind, through the ‘contracts for difference’ (CfD) scheme, shows significant future reductions can and will be made.

“Both mechanisms were designed to cut costs.”

Beauly-based anti windfarm campaigner Lyndsey Ward said: “The halting of subsidies early should reduce bills.

“It’s time developers accepted that Westminster, in an act of financial good sense and compassion for communities, has shot their geriatric cash cow.”

URL to article:  https://www.wind-watch.org/news/2015/07/15/economist-claims-consumers-bear-1billion-wind-farm-brunt/