Feed-in frenzy: Wind industry plays down subsidy scandal
The wind industry has dismissed accusations that turbine operators helped themselves to £175m of public money through a loophole in the Government's Feed-in Tariff (FiT) subsidy.
According to an Institute for Public Policy Research (IPPR) report released on Tuesday, operators have been deliberately capping (derating) the power output of their turbines, to fall into a more generous subsidy band.
The FiT - which is designed to support small scale renewables - pays out 13.34p for each kilowatt hour from turbines that generate between 100-500kW. By contrast, if a turbine pumps out 500-1,500kW then its owners receives 7.24p/kWh.
Freedom of Information
By comparing information on the model of installed turbines- received from DECC following a Freedom of Information request - with Ofgem data on recorded onshore wind projects, the IPPR estimated nearly half of installed turbines in the 100-500kW band were derated.
If the loophole is not closed by the end of 2015, it could cost the taxpayer another £250m, said the think-tank.
"This loophole is short-changing billpayers to the tune of millions of pounds a year," said Joss Garman, senior research fellow at IPPR. "Ministers should act immediately to close down what is becoming a 'feed-in frenzy'. It is distorting the energy market, lining the pockets of investors and undermining public confidence in Britain's vital clean energy sector."
The role of onshore wind energy in meeting Britain’s future energy needs is deeply contentious, with both the Conservative party and Ukip promising to curtail or scrap subsidy schemes designed to support the technology.
However a Decc survey released last week revealed that 68% of Britons support onshore wind, up 2% from 2010.
The wind industry has broadly played down the allegations, saying that operators had adhered to Decc rules and that IPPR had oversimplified the topic.
RenewableUK's deputy chief executive, Maf Smith said "De-rating is a complex issue - for example, it may be necessary because of limits in the capacity of the grid to cope with the amount of electricity that's being generated, or because a site where the wind is lower needs a turbine with longer blades to make the best use of it.
"The IPPR report doesn't take account of these legitimate reasons for using the right turbine in the right location. It's also worth remembering that we're talking here about 103 operational turbines at the most. That's less than 1% of the 12,000 small, medium and large-scale onshore wind turbines generating in the UK."
Smith also pointed out that the derated turbines were not taking money out of the taxpayers pockets, because the FiT subsidy has a capped allowance.
A Decc spokesperson went one step further saying that the figures used by IPPR were downright wrong.
"This report is based on incorrect and second-hand information - the numbers just don't add up," she said. "We keep this issue under constant review to make sure consumers are getting the best possible deal, and an in-depth investigation is currently under way.
"We will take any action necessary if wind developers are found to be unfairly exploiting the FiTs scheme."