Library filed under Taxes & Subsidies from Europe

Wind farms turn huge profit with help of subsidies

Lavish subsidies and high electricity prices have turned Britain's onshore wind farms into an extraordinary moneyspinner, with a single turbine capable of generating £500,000 of pure profit per year. According to new industry figures, a typical 2 megawatt (2MW) turbine can now generate power worth £200,000 on the wholesale markets - plus another £300,000 of subsidy from taxpayers. Since such turbines cost around £2m to build and last for 20 or more years, it means they can pay for themselves in just 4-5 years and then produce nothing but profit. The lucrative outlook has led to a surge in planning applications for new windfarms.
27 Jan 2008

EU plans to see our economy blown away

Few might guess, from the two-dimensional reporting of these plans in the media, just what a gamble with Europe's future we are undertaking - spending trillions of pounds for a highly dubious return, at a devastating cost to all our economies. The targets Britain will be legally committed to reach within 12 years fall under three main headings. Firstly, that 15 per cent of our energy should come from renewable sources such as wind (currently 1 per cent). Secondly, that 10 per cent of our transport fuel should be biofuels. Thirdly, that we accept a more draconian version of the "emissions trading scheme" that is already adding up to 12 per cent to our electricity bills. The most prominent proposal is that which will require Britain to build up to 20,000 more wind turbines, including the 7,000 offshore giants announced by the Government before Christmas. To build two turbines a day, nearly as high as the Eiffel Tower, is inconceivable. What is also never explained is their astronomic cost.
26 Jan 2008

Blowin' in the Wind

If you thought the 2008 presidential race was shattering all records for windy rhetoric, it's nothing compared to the political eco-rhetoric being spun to US taxpayers -- to get them to cough up billions of dollars to fuel a renewable wind power industry boom sensible investors won't touch with a turbine's rotor blade. ...Wind power sounds a great European success story -- one to be echoed in the US, it seems, as 2008 is set to see wind power developments shatter records for the fourth consecutive year. However, a closer look at the European "success" story reveals that all is not quite as it seems. Wind seems to be blowing in the mind of the politically correct and those on the recent environmentalist bandwagon but the cost is going to be huge, no companies will plunge into it without massive government subsidies and, if actually built, power reliability will take a nosedive. ...The bottom line is that the renewables debate, and investment in it, is as much about ideology and political belief as it is about economics and environmental issues. When the real cost of turbine power as a major player toward our future power needs is assessed, the answer just ain't "blowing in the wind".
23 Jan 2008

Blowin' in the Wind

If you thought the 2008 presidential race was shattering all records for windy rhetoric, it's nothing compared to the political eco-rhetoric being spun to US taxpayers -- to get them to cough up billions of dollars to fuel a renewable wind power industry boom sensible investors won't touch with a turbine's rotor blade. ...Wind power sounds a great European success story -- one to be echoed in the US, it seems, as 2008 is set to see wind power developments shatter records for the fourth consecutive year. However, a closer look at the European "success" story reveals that all is not quite as it seems. Wind seems to be blowing in the mind of the politically correct and those on the recent environmentalist bandwagon but the cost is going to be huge, no companies will plunge into it without massive government subsidies and, if actually built, power reliability will take a nosedive. ...The bottom line is that the renewables debate, and investment in it, is as much about ideology and political belief as it is about economics and environmental issues. When the real cost of turbine power as a major player toward our future power needs is assessed, the answer just ain't "blowing in the wind".
23 Jan 2008

Wind farming at any cost

When there is considerable debate over future financial prospects of an industry, it's hard to argue over the present value of an asset. But some Scottish & Southern Energy investors are bound to raise eyebrows over the €1.46 billion it's just paid for wind-farm operator Airtricity. After all, it costs roughly £1 million/MW to set up a modern windmill. Airtricity has 600 MW of assets built up and permission to build another 963 MW of assets. Which means that if Scottish & Southern had set up the mills on its own, it would have cost roughly £1.6 billion. In buying Airtricity, it's now likely to end up paying nearly £3 billion. Scottish & Southern has warned investors the deal won't enhance earnings until 2011. Scottish & Southern's problem is the scarcity value of wind-power assets as the EU's energy policy makers have set a renewable-energy target of 20 per cent of total supply by 2020. The UK has a self-imposed target of 10 per cent by 2010.
8 Jan 2008

'Green' energy up in Germany but future clouding: producers

Federation president Johannes Lackmann said investment in renewable energy sources turbines had actually fallen in 2007 and called on the German government to do more to stimulate its growth. "The government's current provisions are insufficient to continue the successful course of recent years," he said. Tax breaks and other subsidies that renewable energy sources receive in Germany are due to be gradually phased out over the next few years, which "green" producers say will erode their already weak competitiveness compared to traditional energy sources such as coal and nuclear power.
8 Jan 2008

Investment banks seek fees and returns from renewable energy sector

...global investment bank Lehman Brothers agreed to advise and finance the $700m Cape Wind project, the US’s first offshore wind farm located near Nantucket Island and a landmark cause for many environmentalists. This March, Goldman Sachs sold its investment – redubbed Horizon Wind Energy – to Portugal’s largest utility, EDP, for more than $2.1bn, making a profit of $900m. But Lehman Brothers’ project, despite early state-level approvals, has been stuck in bureaucratic purgatory from which it is unlikely to emerge soon. The problem: Nantucket’s millionaire residents oppose the wind farm, which they claim would ruin their ocean views. The contrast between the outcome of the Zilkha investment and the Cape Wind project illustrates the unpredictability of the clean technology sector. “There is no doubt in my mind that renewable energy is like other tech start-ups, where some will succeed and many will not.”
4 Dec 2007

SEP head ‘cautious’ on green energy

Paterson said although alternative energies would undoubtedly become very important in years to come, there was "little clarity" in the sector at the moment. Many fundamental questions remain about how to best capture and transmit energy from natural sources, making it difficult to assess the potential effectiveness of new innovations. However, Paterson said the biggest barrier was the fact that the sector is heavily regulated and influenced by government. Much of the current interest in alternative energies is being driven by strong support from Europe, the UK and the Scottish Government. "But from an investor's point of view, we have got to think about the long term," Paterson said. "What happens if the government changes, or priorities shift?"
30 Nov 2007

European power companies breeze into the U.S. wind farm business

The European Union has taken the lead on many climate change issues - from ratifying the Kyoto Protocol to passing laws to require and encourage the development of renewable energy. Why, then, are so many European energy companies looking to invest in the United States? For António Mexia, the chief executive of Energías de Portugal, the answer is simple. "The United States is the fastest-growing market in the world for wind power," he said. "If we want to be a leader, we have to be here." ..."In America you can put up a 200- or 300-megawatt wind park," Mexia said. "You can't do that in Europe" because of the lack of open space for such large wind farms. There is also more potential for growth in the United States, where wind farms account for barely 1 percent of installed generating capacity. In some EU countries, that figure is as high as 10 percent.
6 Nov 2007

Vestas on crest of alternative energy wave

Canadian investors looking for exposure to the booming alternative energy sector have a handful of domestic players to choose from, but the local pickings are pretty slim and most of the companies are small. So why not look overseas, to one of the green behemoths that has sprung up on the international scene? ...The fast-growing U.S. wind power industry, driven by favourable government tax policy, is Vestas' largest current market. ...Some analysts are also urging caution over Vestas' high price. "We find the shares are fundamentally overvalued," said analyst Christian Nagstrup of Jyske Bank, a Danish financial institution. The biggest risk he sees at Vestas is a bottleneck in getting parts to build the turbines. Subcontractors have been slow in delivering key components, and that could slow delivery of complete turbines, Mr. Nagstrup said in a recent report.
25 Oct 2007

Vestas on crest of alternative energy wave

Canadian investors looking for exposure to the booming alternative energy sector have a handful of domestic players to choose from, but the local pickings are pretty slim and most of the companies are small. So why not look overseas, to one of the green behemoths that has sprung up on the international scene? ...The fast-growing U.S. wind power industry, driven by favourable government tax policy, is Vestas' largest current market. ...Some analysts are also urging caution over Vestas' high price. "We find the shares are fundamentally overvalued," said analyst Christian Nagstrup of Jyske Bank, a Danish financial institution. The biggest risk he sees at Vestas is a bottleneck in getting parts to build the turbines. Subcontractors have been slow in delivering key components, and that could slow delivery of complete turbines, Mr. Nagstrup said in a recent report.
25 Oct 2007

Energias de Portugal to monetize more wind tax credits; plans IPO

Energias de Portugal plans to monetize about 650 MW of tax equity credits by the end of 2007 that it gained through its acquisition of Horizon Wind Energy from Goldman Sachs in July, Antonio Mexia, EDP CEO, told Platts Friday. On the eve of its $3-billion acquisition of Horizon Wind, EDP monetized the 722 MW of Horizon's operational wind farms by selling them for $700 million in deal facilitated by a Citigroup-led group of banks.
28 Sep 2007

Incentives and Subsidies Blow the Revenue Graph Northward in the Western European Wind Power Market

However, the wind power market has a long way to go before it catches up with the more established fossil-fired generation market in terms of capacity of plants and market penetration. This is partly due to the inadequate supply of essential components, rising installation costs and over-dependence on subsidies. ..."Long-term government incentives and installation rebate supports are expected to help wind power participants meet the heavy capital required for production and installation," observes Thaler. "To become independent of government subsidies, the market has to implement intense end-user marketing and increased output to match conventional fuels."
12 Sep 2007

Windfarm policy rewards energy companies

Millions of pounds of subsidy is pouring into the coffers of multinational energy companies while grave doubts remain about how much renewable energy is actually being produced and how best it can be fed into the national grid. No account is being taken of the damage being done to the finest wild landscapes of western Europe, the consequences for the Scottish tourist industry or the visual impact of enormous wind turbines on local communities and outdoor recreation interests.
3 Sep 2007

EU Commission pays group to lobby Brussels

The European Commission was accused yesterday of a "grotesque" waste of taxpayers' money after it allocated funding for an organisation that exists to lobby Brussels. The lobby group, Friends of the Earth Europe, received £562,000 funding from the EU Commission last year. Its commission funding rose this year by 200,000 in order to meet "increased running costs." The group, which has a 25-strong staff in Brussels, is pre-eminent in lobbying the EU for tighter controls to combat global warming.
18 Aug 2007

Ill wind blows for home micro-generators

Suppliers of mini-wind turbines and solar panels for the home have reported falls of up to 90 per cent in customer enquiries after the Government cut subsidies in May. While Energy minister Malcolm Wicks and Conservative leader David Cameron struggle with the vagaries of the UK's planning system (see below) to get their wind turbines erected, fewer ordinary households are now even bothering to apply.
23 Jul 2007

Islands urge cut in green energy costs

The cost of connecting green energy schemes in the Scottish islands to the National Grid is untenably high and should be cut, according to a new report. Orkney, Shetland and the Western Isles are seen as having huge potential for renewables, but regulations form a barrier to unlocking the resources. The report was drawn up by Xero Energy (XE) for Highlands and Islands Enterprise (HIE) and the three island councils, which are all promoting renewable-energy projects. It suggests charges are against EU rules on grid connections and could be challenged through legal action.
17 Jul 2007

Why the answer isn't necessarily blowing in the wind

Driven by concerns about climate change and security of electricity supply, public and political commitment to renewable energy has never been stronger. Generous financial support and market interventions have encouraged extremely rapid deployment in many European states and it is now a commonplace of the financial press that environmental business has become mainstream. And so it should. But some are now asking whether this rapid growth, and politically-driven target setting at local and national level, is creating a secure position for environmental technologies, one grounded in the realistic perspectives of engineering and science, or, on the other hand, a mere flash in the pan caused by speculative, subsidy-hunting developments. A wealth of data about the renewable energy experiment worldwide, and particularly in Europe, is now slowly emerging, allowing decision makers to evaluate the success of their policies. These results, as you would expect of real-world data, are mixed, and as we all get to grips with the implications, a change in the way the renewable energy sector operates is likely.
16 Jul 2007

https://www.windaction.org/posts?location=Europe&p=18&topic=Taxes+%26+Subsidies
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