The economic benefits of wind (DECC report)

A few months ago there was a major outcry from 101 Tory MPs urging the Government to drastically cut the annual £400M subsidy paid to wind farm operators.

It's true, £400M sounds like a lot of money. But just last week a report, jointly published by the Department of Energy & Climate Change (DECC) and RenewableUK, that details the wider economic and social benefits of onshore wind produced the following statistics:

  • 8,600 jobs and £548M resulting from direct supply chain business
  • 2,400 jobs and £85M resulting from indirect income effects of employment
  • 300 jobs and £11M resulting from tourism
  • £198M in tax revenues

All of the above are set to increase, by an amount proportional to the roll-out of new capacity. For example, if the UK were to achieve  the 2020 target of 19GW of capacity the figures are as follows:

  • 17,900 jobs and £580M in the supply chain
  • 5,400 jobs and £192M from indirect income
  • 800 jobs and £27M from tourism
  • £572M in tax revenues

Not only does onshore wind represent by far the cheapest form renewable electricity, but for every £1 spend in subsidy, the UK benefits from more jobs and more foreign and domestic investment currently worth £1.61 (excluding tax revenues).


Open letter to PM from Caroline Lucas

by Caroline Lucas MP

Dear prime minister,

I welcome the fact that, after almost two years in power, you used the recent Clean Energy Ministerial (CEM) event to finally indicate the level of your commitment to creating an urgently needed green economy.

It was encouraging to hear you acknowledge that the main cause of recent energy bill hikes has been rising gas prices – not green policies, as many in your party and your government seem intent on claiming.

Indeed, since you were elected as prime minister, a yawning gulf has emerged in the government over key energy and climate change policies and, as you will know, there is widespread concern that this is proving disastrous both for our economy and our environment.

I share these concerns.

Since the CEM was a high-level ministerial event, attended by energy ministers from 23 different countries, I would have expected the prime minister of what aspires to be the "greenest government ever" to make far more of this opportunity.

It was an ideal chance to show real ambition for our trailblazing renewables sector and champion the potential for building a resilient economy through investment in tackling climate change, as well as addressing fuel poverty.

Instead your remarks were short on real content and commitment. They revealed poor leadership, poor understanding of the risks of climate change and a poor grasp of the opportunities afforded by renewables and energy efficiency.

You have confirmed that your government believes the UK should remain addicted to gas and fossil fuels. Given the huge potential of our national renewables and energy efficiency sectors to provide secure and home grown clean energy for the future, and in particular our potential to become a world leader in marine renewables, this lack of vision is bad for the economy and bad for consumers.

I agree that renewables need to become financially sustainable. That is the purpose of providing public subsidies to new industries. But it is disingenuous to demand that renewables suddenly become financially sustainable at the same time as your government is indirectly subsidising the dirty fossil fuel industry to a tune of six times more than renewables.

Your weak position on our long term energy mix is ill-informed, will be costly to householders in future, and won't put our country on track to exploit the employment opportunities of a truly thriving renewables industry. Nor does your position recognise the need to cut carbon emissions in line with the science.

The Climate Change Act commits the UK to cutting carbon emissions reductions by 80% by 2050, but these are the wrong targets. They only give us a 50-50 chance of keeping climate change to below 2C.

Maria van der Hoeven, executive director of the International Energy Agency, warns that "under current policies we estimate energy use and CO2 emissions will increase by a third by 2020, and almost double by 2050. This would probably send global temperatures at least 6C higher within this century."

Achieving a more secure, sustainable energy system, in line with the goal of limiting the rise in global temperatures to under 2C, is still possible but requires urgent action by the world's governments. And it requires honesty with the public about the risks of inaction to the economy, for example, to health, agriculture, food production, water resources, coastal flooding, and extreme weather events.

As prime minister, you can begin to make a real difference if you attend the Earth summit in Rio in June. Governments are currently failing to avert the prospect of catastrophic climate change, so the UK has an opportunity to lead by example on the world stage, starting by giving its backing to an EU target of at least 30% greenhouse gas reductions by 2020.

The scale and urgency of the threat of climate change demands national and international leadership of extraordinary boldness. It's time for you, who rebranded the Conservative party on the environment, to step up.

Yet we clearly need some better policies than those you are offering at the moment. Your government's nuclear policy is tatters – you pledged not to spend public money on subsidising new nuclear, yet it's clear that it cannot be built without state aid. The huge costs and liabilities involved in nuclear make it completely uneconomical, and it certainly won't deliver energy security or emission reductions in the timescales required. Meanwhile, carbon capture and storage remains little more than a pipe dream, and the era of cheap fossil fuels is over.

So here are five measures that would help, and should have been in your speech:

Instead of saying yes to shale gas exploration, the government must declare a ban on all fracking. Serious questions remain over the impacts on groundwater pollution, health, air pollution, whilst the evidence indicates that the exploitation of shale gas is incompatible with tackling climate change. Moreover, since shale gas extraction will also divert investment away from renewables, the UK's potential reserves must be left in the ground.

A commitment that electricity market reform (EMR) legislation will be designed specifically to enable the development of various renewable energy technologies, rather than being written by and for the nuclear industry. Nuclear power has no place in a green energy future.

We need a road map to demonstrate how the UK's electricity sector will be virtually zero carbon by 2030, as recommended by the UK's own independent advisers on the Committee on Climate Change, and required to meet existing climate targets.

An end to subsidies to fossil fuels, and for the UK to show leadership on this internationally. The UK and other G20 leaders committed to this in 2009 and have done little since. The UK fossil fuel subsidy is estimated at £3.63bn in 2010, mostly in the form of VAT breaks and considerably more than the £1.4bn subsidy for renewable energy in the same year.

Reducing energy demand should be made a priority, both in the proposals for EMR and elsewhere across government policy making. Energy efficiency is the best way of keeping bills down, addressing fuel poverty and reducing the need for new energy supply of any kind, yet your speech yesterday was silent on the subject

These polices don't just make economic and environmental sense, they have public support too. A recent poll by YouGov revealed that 64% of people want their electricity 10 years from now to be sourced from renewable energy, while just 2% want more gas.

The climate crisis is real – so too is the economic one. That's why I am urging you to use the Queen's speech to announce legislative proposals that will help us overcome both, creating hundreds of thousands of jobs, eliminating fuel poverty and reducing climate emissions – and sending a clear message to your party, to detractors in your government and to other leaders internationally.

I look forward to your response.

Yours sincerely,

Caroline Lucas MP

Brighton Pavilion, Green party

Published 30 April 2012


1000's of new jobs at risk after Tory attack on wind

The Guardian on Sunday reported that thousands of new jobs and over £500m of foreign investment is on hold after the Tory 'Green Revolt' from a few weeks ago.

In  addition, proposals to reduce Feed In Tariffs and previous cuts to the value of certificates awarded under the Renewables Obligation have added to the financial uncertainty.

As a result, proposed new developments including factories and R&D plants from several major manufacturers are now at risk pending reassurance from the Government that  they are not back tracking on previous commitments to a low carbon economy.

General Electric. £100m manufacturing plant "on hold"

Vestas. £???m. 2,000 jobs in a new Kent factory. "waiting to see"

Siemens. £210m + 700 jobs. "significant lack of enthusiasm"

Mitsubishi. £30m in R&D. "Commitment from Government is vital"

Well done Tories.


Cynical Tory MPs attack wind

So the Telegraph reports that 101 Tory MPs have written to David Cameron complaining about on-shore wind power. Within the first half page of the story the contradictions are clear to anyone with a few brain cells to spare.

The primary complaint seems to be that on-shore wind turbine subsidy is too expensive at a time when the economy is struggling. No mention that off-shore wind is around three times more expensive to produce. No mention that on-shore wind is the cheapest renewable energy source on a £/kW basis. No mention of DECC data that shows increases in underlying fossil fuel prices are pushing up bills much faster than renewables. No mention of massive and record quarterly profits being made by the likes of Exxon Mobile ($9.4bn) or BP ($5.1bn) and certainly no mention of the billions of pounds that will need to be spent on climate change mitigation methods resulting from the use of fossil fuels.

Tracey Crouch, said: “It is tragic that we blight our countryside with hideous electricity pylons and now we intend not only to do the same with onshore wind farms but also to subsidise them."

So pylons are ugly and we should bury electricity cabling? Any idea how much that would cost? There are around 88,000 pylons in the UK and National Grid price underground cabling at £20m per kilometre.

So just be aware, the people who are telling you wind power is too expensive are the same ones what would advocate ripping out all the pylons at huge expense. As for the staggering subsidy of £522m - for this the UK gets a new industry that employs thousands of skilled workers and clean low carbon energy.

What did we get for the tens of BILLIONS used to bail out the bankers?

No, the answer is clear. Big oil is running scared of renewables and is lobbying hard to put the brakes on. Meanwhile the Tories have been spotted their chance to derail Coalition policy with the untimely demise of Chris Huhne.


Dieter Helm spouts more nonsense on BBC Panorama (UPDATED)

UPDATE: Action For Renewables have uploaded their "de-bunking" of Panorama here

In BBC1's Panorama last week (What's Fuelling Your Energy Bill?) enviro-skeptic Tom Heap painted the picture that the move to renewable energy sources is to blame for spiraling home energy fuel bills.

There is some truth here, even OFGEM figures support that renewable energy is adding to fuel bills. However the conventional wisdom (now accepted by all the worlds leading scientists) is that not only are fossil fuels damaging the environment, but that increasingly they are imported from political "hot zones" and may even be running out. Therefore, in the medium to long term, energy from conventional sources is set to rise at a much faster pace - eventually making renewable energy prices competitive and perhaps even cheap.

Only this year the International Energy Agency admitted, after years of denial, that peak oil has probably already occurred and therefore it is hard to understand how, as predicted by Mr Helm that oil and gas prices are set to fall. Indeed Mr Helm provided no evidence for this brave assertion nor was he cross examined by the presenter.

Worse still is that in a recent article for the Guardian Mr Helm claimed:

There is enough oil and gas (and coal too) to fry the planet several times over. The problem is there may be too much fossil fuel, not too little, and that fossil fuel prices might be too low, not too high.

The truth is, that with record high prices anyone with large gas and oil reserves will be pumping as fast as they possibly can. Aside from environmentally disastrous shale oil there have been no "mega fields" discovered since the 1950's and 60's. Even if this wasn't the case - just look at where the oil and gas is being exported from. Should the UK be beholden to the likes of Russia and Suadi Arabia?

So the rather biased message in Panorama was this - renewable energy is pushing up your fuel bills while we should be "dashing for gas" because some (un-named) miracle is about to return gas prices to much lower levels.


George Osbourne

This week in The Independent there are reports of a major split opening up in the Coalition Government between the Chancellor, George Osbourne and the Energy and Climate Change Secretary, Chris Huhne.

The Chancellor has said that he does not want the UK to "lead the way" in its efforts to reduce carbon emissions stating that, to do so would somehow put the UK at a disadvantage within the EU. A growing faction within the Tory party seem to think that green policies will damage the "economic recovery".

In a recent speech Chris Huhne has indirectly attacked the Chancellor saying:

"We are not going to save our economy by turning our back on renewable energy."

So, is this a return to the good old Thatcherite days of tax cuts for the ultra rich while the rest of the country burns? Possibly, yes. At this stage it looks like it is down to the Lib Dems to keep things on track. Chris Huhne may not be able to save the planet, but hopefully he can prevent the Tories from destroying  the UK.

Europe is floundering amid economic and political turmoil and now is the opportunity for the UK to plant the seeds of the next major economic boom - The Climate Revolution.

Just as the Industrial and more recently the Information Technology revolution did, this new era will see massive opportunities for those nations that set the right environment for businesses to evolve and thrive. Lets get this straight... paying lip service by tweaking a tax here and there will not cut it. We need green policies that go well beyond those we have now to create the environment in which large scale renewable energy rollout can happen, such as automatic permitted development rights for all small to medium scale renewable generation and a much simpler planning process for mid to large scale.

Climate Change is one of most important issues facing humanity in the next 50 years and according to the United Nations, the sooner we address it the cheaper it will be. Not only will reducing carbon emissions sooner save money in mitigating climate change, but those who do will lead the way in developing and owning the new technologies that result.

The answer is amazingly clear - rather than dump billions of pounds of tax payers money into quantitative easing (which has not and is not really working) spend it investing in green technology and fund the schemes that result in inward and foreign investment into the UK. In sorting out our own house.... we'll have developed the tools to sell others.

By way of a concrete example, Denmark was one of the first European countries to roll out government grants for wind energy. Is it any surprise  that the worlds biggest wind turbine manufacturer, Vestas is Danish? In 2010 Vestas turnover was nearly €7bn.

The UK will either be on the train or run over by it. George Osbourne's paymasters will not care one way or the other, but you might.


What will the Feed In Tariff add to my bills?

There is a LOT of misinformation and finger pointing regarding the FIT. As wind turbine developers we often get two slightly contradicting arguments used against us:

  1. Wind turbines are inefficient and do not produce much electricity
  2. Wind turbines will cause household electricity bills to rise significantly

The FIT paid is based on the amount of electricity generated, so the more inefficient and useless wind turbines are... the less the operators get paid. Conversely, if they are very efficient and generate lots of clean electricity then the payments can be large. Thus the two complaints above seem mutually exclusive.

Yes, the FIT is a subsidy, without which the UK or any part of Europe would simply not have a renewables industry.

Why is the subsidy needed? Simple, because for decades energy has been hugely undervalued. The cost of fossil fuels was predicated on an unending, ever increasing supply and the smart money now says that world oil production probably peaked a few years ago. So, today we have an energy market that is only now just starting to price in the replacement cost of the primary resource - hint... you cant just go and plant more oil and gas and there have been no new "mega fields" discovered in the last 30 years. This is why energy price inflation is in double digits and set to continue.

Because the true cost of energy is still massively undervalued it means that the cost/kWh that you can sell electricity for is still much to low to make small/medium scale projects viable. In 10..15 years time when prices have soared it might be different. In the meantime, the transition period, subsidy is required to plug the gap. Don't be fooled into thinking nuclear is not subsidised either - if the operators had to budget for clean up costs it is unlikely that any new stations will be built.

As for how much small/medium wind projects actually add to domestic energy bills, the best estimate comes from DECC (Department for Energy and Climate Change) who predict:

Our policies would increase household electricity prices by 25% in 2015 and 30% in 2020 compared to what they would have been in the absence of policies

The contribution of individual policies to the 30% policy-driven price increase estimated for 2020 is as follows: i) A third of the total cost comes from carbon pricing policies – both HMT's carbon price floor and the carbon price derived from the EU emissions trading scheme. ii) A third comes from the Energy Company Obligation – the successor policy to CERT, to be implemented from late 2012 alongside the Green Deal, mandating energy companies to install hard-to treat energy efficiency measures and make fuel poor households more energy efficient. iii) A fifth of the total policy cost comes from Electricity Market Reform's new long-term contracts. iv) A fifth comes from price support for renewables under the Renewables Obligation. v) Around 5% of the total policy costs comes from small-scale feed-in tariffs.

So an average home using 4,000kWh annually at a current rate of 15p/kwh would expect to pay £600 per year. By 2020 this could rise to £780 of which the FIT will account for just £9.

So, using DECC's optimistic figures for the take-up on all renewable technologies (including wind, solar, biomass, geo-thermal etc) under the FITS scheme, the average household will pay just £9 extra per year by 2020.

£9 a year to help save the planet - seems like very good value for money.


Signs and Portents

Just this week Scottish Power have announced gas and electricity price increases of 19% and 10% respectively with the threat that other suppliers may follow suit.

Gas price increases in summer?

Typically this is when demand is at its lowest and historically prices have fallen. If energy costs are spiraling, what then of food? Again, only this week a UN report warns that global food costs could increase by 30% - on top of 37% increases in many foods just in the last 12 months alone!

Oil prices are hovering around $115 per barrel having touched $125 earlier this year after a warning from the EIA that global production of oil has peaked. After years of denial the EIA has finally admitted that, unless some as yet undiscovered mega-field magically appears...

the amount of oil available every year from now on - will be less than the year before.

There have been many books written on the possible outcomes following peak oil with visions ranging from hellish Mad Max to a utopian Star Trek. One thing is for sure, as conventional oil stocks deplete the oil co's will focus their attention on harder to extract (aka more environmentally destructive) oil locked in the Canadian tar sands or perhaps under the polar regions.

Let's not forget climate change. While the economic downturn has been taking center stage the environmental picture has not improved. In 2010 CO2 emissions leaped to over 30 GIGATONNES.

Many experts now agree the goal of preventing a 2 degree rise in global temperatures is almost impossible.

Climate change is real and its already here. Weather patterns are becoming more erratic, every year the rate at which "record weather events" occurs appears to rising... record heat, record cold, record drought, record flooding... its there if you go and look for it.

The lack of fresh water is now also becoming a major issue.. this time outside of Africa. From the USA to China fresh water rivers are drying up - often as warming is causing a reduction in the annual snow fall on the great mountain ranges from which the rivers flow. Pressure on fresh water supplies then feeds directly into food prices.

All this as the worlds population moves towards 7 billion souls.

The signs and portents that have been present for years are now screaming at us to change.

How will we respond?


Bank of England warn on expected jump in fuel prices

In todays inflation report by Mervyn King the Bank of England warn that general inflation will likely hit 5% and that gas and electricity prices will increase by 15% and 10% respectively later this year.

Since the UK is now a net importer of oil and gas we can only assume that hiking interest rates (seemingly their only blunt tool for combating inflation) will have no effect on energy prices.

We've said it many times - renewables may look expensive compared to conventional energy - today, but in five to ten years time they will look dirt cheap.

You were warned.