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November 20, 2013

DECC Minister Defends "Green Levies" To Build Wind Farms

By Stewart Dalby I was talking about Ed Davey, the Minster for Energy and Climate Change, in this column last week and that it was good to run across him at Renewable UKs annual jamboree in Birmingham recently. By comparison with some of the jokers who have held this office, he seems a rational, balanced individual, at least in his public utterances.

Stewart Dalby In the past we have had the likes of Ed Miliband. For it was he, who was the minister at DECC in the last Labour government. He was an acolyte of Gordon Brown, which does not look on anyones CV these days. But more than this he was behind the Feed-in Tariff fiasco. He set the initial price too high, at 41p a kilowatt hour against a 7p KWh market price. The idea was anyone who would put a couple of 2KW solar panels in their south facing roofs could get paid for the power produced even if they used it themselves; and maybe sell it back to the national grid.

What happened was just about every spivvy builder around started constructing 50MW solar and wind farms on Greenfield sites in the countryside, sold everything to the national grid (totally against the spirit of the Feed-In Tarrif scheme) and claimed the whopping great subsidy.

Chris Huhne, the first environment minister in the coalition government and Daveys predecessor tried to put a stop to this by reducing the Feed-In tariffs. But in truth he did not achieve a great deal else during his turn in office. He is an arrogant man, too clever by half, as Tory grandees use to say about young whippersnappers. His cleverness eventually landed him in the slammer.

Davey a less noisy figure than either Huhne or Miliband, made a reasoned speech to the Renewable UK conference. He is clearly very keen on renewable energy (perhaps it was because of the audience he was talking too). But methinks he massaged his figures a bit to make his case. He said with a fifth of electricity generating capacity due to close this decade, we need 110 bn of new investment to keep the lights on. He doesnt say how much of this will come from consumers in the form of green levies.
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He says since 2010 31bn worth of private sector investment in renewable electricity has been announced with the potential to support over 35,000 jobs across the UK. Again he does not say how much the consumers have paid. I venture to suggest it is probably three times the 31 bn. And what about the jobs. It was suggested not so long ago that the north east of England an old industrial base would be littered with factories making wind turbine blades. As it is most of the growth of wind farms has been fuelled by imports notably from Vestas which is Danish. Vestas used to have a factory on the Isle of Wight, but they closed it because of the difficulties in getting planning permission.

He says that the UK leads the world in offshore wind farms. In fact there is around just over 3 giga watts (GW) of capacity in the North Sea, a long way short of the 32 GW once talked about. There is around 7 GW of wind farm generating capacity onshore.

Despite all this, Daveys logic is clear. A developing industry needs support and subsidy. James Lovelock -- the Green Guru2 whose angered his fellow Greens by changing his mind about nuclear power plants which he now favours reckons it takes40 years for any innovation to become acceptable and for the price to drop. Well maybe. The point is, as I keep banging on about, this: You cant have it both ways. If you want to de-carbonise the economy and achieve energy security you have to pay for it. Because of the furore over rising energy prices the government has launched a review. The review is looking at what Davey calls the social green levies Warm Homes Discount and the Energy Company Obligation. These have been threatened with cuts Davey says: We need to make sure that such support is paid for in a way that is fair to consumers. But he adds: But let me reassure you as clearly and unequivocally as I can, the current review is not about changing investment incentives for renewables, such as the Renewables Obligation, Contracts for Difference or Feed in Tariffs. The level of support will remain, as planned and as published.

We will see. There is the David Camerons get out of jail free card which he likes to play. He suggests there is going to be a shale gas and oil revolution in the UK that will replicate that in the US. We will be self- sufficient in energy. We will have energy security. We will not have to worry about supporting expensive and uneconomic wind farms. Well, maybe. Not everyone in the UK believes a shale revolution will deliver us from expensive gas and electric bills here. More on this next week.

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