Wind farms are being handed record subsidies in a move that is driving up power bills for hard-pressed families.
The operators were last year given an uprecedented £1.3 billion, analysis shows.
The payments were made under a scheme set up almost 20 years ago to lure firms into what was then the uncertain field of green energy.
But the subsidies have continued even though wind farms are well established and highly profitable.
Last night, critics warned that the payments were effectively doubling the cost of household energy bills and called for the ‘disgraceful’ scheme to be scrapped.
The eye-watering cost of propping up Scotland’s renewable sector is the result of the Renewables Obligation scheme, introduced in 2002 by the UK Government.
It was designed to give financial support to green energy projects in their early days, but signed as part of 15 or 20-year contracts that continue today. That is despite many of the owners – often foreign-based – earning millions in profits.
Scots renewable energy firms have claimed more than £10 billion through the scheme, proportionally far higher than any other part of the UK, according to the Renewable Energy Foundation (REF).
The cash is paid by energy suppliers to those generating the power, and the cost passed onto UK consumers in their bills.
The biggest winner has been ScottishPower Renewables’ Whitelee wind farm, near Glasgow, which has received £476 million since 2002. The company, owned by Spanish giant Iberdrola, recorded an £867 million net profit in 2019.
Other renewable developments to have benefited include Robin Rigg, in the Solway Firth, which has received £460 million, and Clyde wind farm, in Lanarkshire, which has been given £426 million.
Robin Rigg is owned by German energy giant E.ON. Its UK arm, E.ON Energy, recorded a £73 million loss last year. Scottish firm SSE owns the majority of Clyde, which made a £5.7 million profit.
However, in a sign of the value of such subsidised projects, SSE sold a 49.9 per cent stake in it in 2016 for £355 million. The subsidies have been analysed by charity REF, using figures from market regulator Ofgem. REF also questioned whether the scheme would be affordable under independence, with the full cost loaded onto consumers north of the Border, where there are proportionately more projects.
Its director, Dr John Constable, said: ‘The subsidy supporting the Scottish Government’ s renewables policy is paid for by UK consumers and will strike many as disgraceful. In the event of independence, UK bill-payers will expect better value for money, and cross-border subsidies are unlikely to continue. ‘Has the Scottish Government thought this through?’ Graham Lang, of campaign group Scotland Against Spin, said: ‘The burden of subsidies on ordinary citizens is out of control and that money is largely going into the pockets of foreign companies and a few wealthy individuals.’
The SNP has hailed Scotland’s green energy sector as a lucrative success story, with the then First Minister Alex Salmond famously claiming the country would become the ‘Saudi Arabia of renewables’.
However, REF shows the sector is still heavily reliant on subsidies.
Under the Renewables Obligation scheme, which was closed to new entrants in 2017, suppliers must show they are using an increasing amount of renewable energy. According to REF, they typically pay an extra £55 per megawatt per hour for doing so – almost double the wholesale cost of energy and a cost that is passed onto customers.
Both ScottishPower and Scottish Renewables stressed that the scheme had laid the groundwork for a self-sustaining green energy sector, which will meet Scotland’s energy needs, provide jobs and help tackle climate change.
Scottish Renewables also said that many newer projects no longer need subsidies and will produce energy at below market rates.
Both the UK and Scottish governments declined to comment.