Copyright: vadimorlov / 123RF Stock Photo
Energy Environment Investment Northern Europe Power Power Grid Technology Wind Power

Britain restarts subsidies for onshore wind

In March 2020, the British government after four years of suspending subsidies for onshore wind announced that it would again provide subsidies for land-based wind farm developments.

The government’s move to provide financial backing for onshore wind farms is because of several reasons including the dramatic fall in the cost of electricity produced by wind turbines in recent years, making it significantly cheaper than rival low carbon power generation such as nuclear.

In addition, the government is under increasing public pressure to adopt a strategy that ensures that the country meets its net zero carbon emissions targets by the year 2050. The government has announced that onshore projects will now be able to directly compete for government subsidies alongside other types of renewable energy generation, such as offshore wind.

Opposition to onshore wind

In 2016, under the previous Prime Minister David Cameron, there was a well-organised minority pressure group such as NOWIND (National Opposition to Windfarms) that was set up to fight the development of onshore wind farms in the countryside. Their opposition to onshore wind was based on the claimed unreliability of windfarms, on their subjective dislike of the visual impact of onshore wind farms and impact on birds and bats. However, in terms of reliability, windfarms are backed up directly by peaking power plants and increasingly by energy storage that can store generated surplus power for later use.

As for bird and bat fatalities because of turbine collisions, such deaths are relatively low, as compared to those caused by traffic or domestic cats. In addition, with the right site selection and wind farm park, it is possible to considerably reduce wildlife fatalities.

Because of the pressure of anti-wind farm pressure groups, the then Prime Minister Mr Cameron withdrew subsidies for onshore wind development in 1996. As a result, it developed very few new onshore wind projects in the subsequent years.

But despite the lack of subsidies onshore wind investors have built onshore projects in the UK, but at a slower pace than before 2016. In fact, according to trade body RenewableUK, there are currently six onshore wind farm projects in the country either near or under construction totalling 203MW.

These subsidy-free sites show what we already know: onshore wind is competitive in the UK. But projects are only viable in some areas, and only with the latest technology.

Change in government policy

However, in 2020 business secretary Alok Sharma said cutting carbon emissions rapidly would mean “making the most of every technology available” including onshore wind and solar. He pledged that the government would do this in a way that did not alienate local communities.

Because of the new political support for onshore wind, the government announced a new plan supporting onshore wind projects. In addition, the governments own surveys show over-whelming public support for onshore wind, in contract to little support for fracking.

Instead that all new onshore wind projects word be able to apply at the new “contracts for difference (CFDs)” auction in 2021. This means that any onshore wind projects that win at the auction could be in operation by the mid-2020s.

One thing is clear, because of existing tough planning restrictions and high property taxes in much of the UK, most of the new onshore wind projects are likely to be constructed in Scotland.

Already, there are thought to be a dozen future projects that are likely to participate in the 2021 auction. In fact, the Glasgow-based power company Scottish Power, which is owned by Spain’s Iberdrola, has announced a list of potential wind and solar farm projects in Scotland. In addition, analysis undertaken by Vivid Economics shows that growing onshore wind from 13GW today to 35GW by 2035 would reduce the cost of electricity by 7%.

Contracts for difference

The Contracts for Difference (CfD) scheme is the British government’s primary mechanism for enabling low-carbon electricity generation.  There have been 3 auctions, or allocation rounds, to date, which have seen a range of different renewable technologies competing against each other for a contract.

For example, at the last auction, some offshore wind projects agreed a power price as low as £39.65 per megawatt hour. This reflects how increasingly efficient wind turbine technology is with longer blades.

In comparison, the proposed nuclear power plant being constructed at Hinkley Point in Somerset agreed a strike price with the government in 2016 at £92.50/ megawatt hour (Mwh) in 2012 prices, which is the equivalent to at least £102/MwH in today’s prices.

One thing is clear, onshore wind is cheaper than offshore wind, because developers do not have to be concerned with the added costs of slating huge turbines offshore, often in deep waters. But due to recent advances in technology, however, the gap between onshore and offshore is narrowing every year.

But, John Sauven, executive director of Greenpeace, said onshore wind and solar were some of the cheapest available sources of energy. One thing is clear; developers of onshore wind need to gain the local support of the public if they are going to overcome opposition from NIMBYs.

As to industry reaction, both the wind sector and green campaigners have met news of government support for onshore wind with excitement, given previous policies that hampered onshore wind installations since 2015. But, there is likely to be some opposition to the new policy direction, especially from groups that supported the previous Prime Minister Mr Cameron’s decision to stop supporting onshore wind projects. In addition, increasing government support for onshore wind will not please those seeking to build new nuclear power stations in the UK.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.