Library filed under Taxes & Subsidies from Europe
CHEERLEADERS for renewable energy are fond of pointing out that patches of desert receive enough energy each year from sunlight to power the entire world. But few deign to explain how the construction of the millions of solar cells required to convert that energy into electricity would be financed. Utility bosses and policymakers tend to dismiss wind and solar power as noble but expensive distractions, sustainable only through lavish subsidies. But new studies suggest that renewables might not be as dear as sceptics suspect...These figures, of course, rely on all sorts of questionable assumptions.
Subsidies for Germany's solar industry will be cut back more than previously announced to free up funds for offshore wind power plants, sources close to the German environment ministry said. The government plans to increase the maximum subsidy for wind power to 0.11-0.14 eur per kilowatt hour from currently 0.09 eur, the sources said. The changes will also force solar power firms to increase the profitability of their facilities if subsidies are cut. German environment minister Sigmar Gabriel is expected to make a statement on the Renewable Energies Law today.
Farmers and landowners should be aware that changes in the way green electricity will be funded mean there is currently strong demand for wind farm sites. The current system, that beefs up the income from onshore wind farm sites by up to 50%, is due to be changed in 2010 or soon after to favour offshore wind farms as they are considered more acceptable to the public rather than on shore ones. "Wind farm companies are going hell for leather to find onshore sites and agree terms with landowners during 2007," notes head of Fisher German's renewables team Mark Newton. "It's a lengthy planning process to get a site approved which normally takes three to five years, and they need to get a project agreed and built before the system changes. Otherwise the site will not be as profitable for the landowner and the wind farm company."
It is 20 months now since British Airways proudly announced a new scheme to deal with climate change: for the first time, passengers could offset their share of the carbon produced by any flight by paying for the same amount of carbon to be taken out of the atmosphere elsewhere. "I welcome warmly this move from BA," said the then environment minister, Elliot Morley. And how much carbon has BA offset from the estimated 27m tonnes which its planes have fired into the air since that high-profile moment in September 2005? The answer is less than 3,000 tonnes, less than 0.01% of its emissions - substantially less than the carbon dispersed by a single day of its flights between London and New York. The scheme has been, as BA's company secretary, Alan Buchanan, put it to a House of Commons select committee earlier this year, "disappointing".
Declaring that climate change is a real and serious threat won't raise too many eyebrows these days. But where the debate really starts to warm up is in asking how much energy consumers should pay towards eradicating the threat of climate change. Soundings by Ofgem suggest that most people expect a reduction in emissions to come at a price. What's not clear is whether the amount people anticipate paying will match what they may be asked to pay.
Green energy tariffs that promise customers environmentally friendly electricity supplies face official scrutiny amid concerns that customers are not getting what they pay for. Ofgem will today outline plans to create a ratings scheme to highlight the most planet-friendly packages. The regulator is working with the Energy Saving Trust to determine a set of criteria under which the best schemes will be awarded five stars.
LONDON, May 25 (UPI) -- The British government Friday said grants will be made available again for those who want to install micro-wind turbines and solar panels on their homes. The Department of Trade and Industry's Low Carbon Buildings Program has already allocated more than $13.5 million to householders and, following the addition of an extra $11.9 million in the national budget, applications are set to open Tuesday for an estimated $23.6 million remaining.
Marshland St James is an isolated, functional, centre-less village, little more than a ribbon of houses along a country road surrounded by farms. In the far west of Norfolk, close to the borders with Lincolnshire and Cambridgeshire, it is a place that locals describe as "bandit country". It is not a place you expect an issue of national importance to find its focus. But on Monday, just a few days before the government released its white paper on energy, a local farmer was found dead in a drainage canal close to his home. A statement from his family linked his death to a battle over wind farms that has torn the village apart.
Energy has a price - as consumers we are painfully aware of it when the gas bill surges or the cost of a litre of petrol catches us by surprise. When it bites our wallets we tend to blame oil companies, Middle Eastern sheikhs or Russian oligarchs, depending on prejudice or the last news headline. Less understood is the political price of energy, but it was the hidden message in the reams of paper published yesterday by Alastair Darling, the Secretary of State for Trade and Industry. For years the Government ignored the warnings about crumbling nuclear plants and the need to scrap dirty coal power stations. Finally someone has grasped the uranium fuel rod.
Britain has had three national policies in ten years. And it still hasn't made up its mind about nuclear energy
Since the extension of the production tax credit, European wind companies have been keener on investing in the U.S. market. Several of the largest turbine producers are now selling to U.S. developers for projects, and opening offices and manufacturing plants in the United States. The federal production tax credit was extended for two years in August 2005 by President Bush. It was set to expire on Dec. 31, 2007, but was extended as one of Congress' last acts and will now run through Dec. 31, 2008. The PTC provides a 1.5 cent per kilowatt hour credit, or 1.9 cents when inflation-adjusted, to energy facilities during the first 10 years of operation.
Britain's energy consumers are prepared to meet some of the costs of curbing greenhouse gas emissions to combat climate change, but are worried they may be forced to assume too large a burden.
Our report described how generators are favouring on-shore wind farms because they are much cheaper to develop than technology such as offshore wind or tidal power. Therefore, the Government is considering changing its policy to offer more ROCs per MWh for more expensive technology. This could reduce the amount of money companies can make from wind farms. However, this will not change until 2009, and any wind farm that is already established by that point will not be affected. For that reason, there is a suspicion that firms are racing to acquire sites before the cut-off point - and the huge amount of money they can make from ROCs mean they can afford to offer large payments to landowners who are willing to allow turbines to be erected.
Landowners in the North-East are being offered staggering sums of money to site wind farms on their property, The Journal can reveal today. A contract seen by The Journal for a site in the region could see the landowner rake in more than £6m for agreeing to the turbines. It demonstrates the huge temptation for landowners, who are offered a guaranteed income way in excess of what they could gain from any other source, for no outlay of their own. And it also illustrates the prices power companies are willing to pay due to the massive incomes they themselves can generate through a Government subsidy system for wind power.
So I'm afraid wind turbines on the Assynt Foundation land will do three things: destroy the iconic scenery, destroy the environment and divide the community. The one thing they might do in addition is make (subsidy) money, which is what all wind farm developers really want. Don't come up with the lame excuse of global warming. Say it straight. It's the money.
A government subsidy system is prompting a "wind rush" in which electricity generators are dashing to erect turbines across the North's countryside. The incentive scheme ensures generating companies which invest in renewable energy sources are paid lucrative sums by suppliers for each megawatt hour (MWh) of electricity they produce. As a result, the companies bidding to erect turbines are offering landowners in the North vast sums as they try to cash in. Suppliers are told they must take an increasing portion of their energy from renewables - the Government's broad target is 20% by 2020 - and the extra cash they need to pay for this is added to household bills. Foreign generating companies have admitted they are now trying to set up wind farms in the UK because it offers the most attractive subsidy package in Europe.
Francis Sullivan, environment adviser at HSBC, the UK's biggest bank that went carbon-neutral in 2005, said he found "serious credibility concerns" in the offsetting market after evaluating it for several months. "The police, the fraud squad and trading standards need to be looking into this. Otherwise people will lose faith in it," he said. These concerns led the bank to ignore the market and fund its own carbon reduction projects directly.
FREE wind turbines and solar panels for low-income families were part of a £155 million blueprint for renewable energy unveiled by Liberal Democrats today. Scottish Lib Dem leader Nicol Stephen said his party had set a target of making 40,000 houses a year into energy friendly homes, with the help of grant support and tax rebates.
THESE should be heady times for Vestas, a Danish firm that makes more than a quarter of the world's wind turbines. The wind business is booming, and the company said last week that it had swung into profit in 2006, thanks to an 8% rise in revenue. But there is "significant unexploited production capacity", Vestas says, due to shortages of high-quality turbine components. Other companies grumble about a lack of gearboxes and bearings. Wind firms' worries echo those in the solar-power business, which is also booming but where a shortage of polysilicon has hampered growth. Silicon is made from sand, which is abundant, but there are not enough refineries to turn it into solar-grade polysilicon. As a result, prices for silicon contracts have more than doubled, to $70 or $80 per kilogram, in the past three years, says Jesse Pichel, an analyst at Piper Jaffray. In both industries demand has rocketed and supply cannot keep up. The wind business is growing by more than 30% a year worldwide, with America leading the way. (This week Energias de Portugal became the latest European utility to invest in American wind farms, with the $2.2 billion purchase of Horizon Wind Energy.) And when a solar incentive scheme took hold in Germany in 2004-05, demand in Europe roughly doubled, says Ron Kenedi of Sharp, the biggest solar-cell maker.
Now, here's where profit pushes its ugly snout into the trough ahead of the needs of the environment: to encourage renewable energy generation, the Government (using our money) pays the generator a guaranteed subsidy, currently around £35 per megawatt hour (MWh). With the scramble among suppliers to buy these ROCs to fulfil their obligation, the most recent price at auction - yes, there's even an eBay-style auction site selling packets of renewable power - was a whopping £46. Now, given that the wholesale price of all electricity is currently about £45, that plus the subsidy doubles the value of wind electricity to more than £90 per MWh. Given that sort of return, those generator boys are - if you'll pardon the expression - cooking with gas. After all, at that price the sort of 120m high mast mooted for dozens of Northumberland sites currently seeking planning permission is calculated to be worth £400,000 a year per turbine to the generating company. Perhaps something more practical than the prospect of quick and plentiful profits should be proffered before we kiss goodbye to the most beautiful landscape in England?