‘Perverse’ onshore wind policy could cost UK £1bn

The Government's "outdated" policy on onshore wind could cost the UK around £1bn over the next four or five years, according to the Energy and Climate Intelligence Unit (ECIU).

A new report published today (25 October) from the non-profit claims that 1GW of new onshore wind farms would be £30m cheaper a year than offshore wind, and £100m less than new nuclear or biomass plants.   

But the UK’s “effective ban” on support for onshore wind is blocking development of the cheapest new electricity generation technology in Britain, ECIU insists. The report calls on the Government to change its “increasingly perverse” strategy or risk affecting consumers bills, British business and the UK’s long-term climate goals.

“The effective ban on the cheapest form of new power generation looks increasingly perverse,” ECIU director Richard Black said.

“For a Government committed to making energy cheaper, this risks not only locking people into higher bills, but also runs contrary to its aim of having the lowest energy costs in Europe. These blustery isles have no shortage of wind and while other European nations are going large on onshore wind the UK is starting to fall behind by not making the most of our natural resource.”

‘Pay for themselves’

Onshore wind has been locked out of the UK’s Contracts for Difference (CfD) framework since 2015, with the current auction process only open to less established renewable technologies such as offshore wind.

Since then, the cost of the technology has plummeted as the industry matured. ECIU says that price reductions mean that onshore wind farms do not need a subsidy, but most developments still require centrally-agreed fixed-price contacts.

“David Cameron promised no new subsidies for onshore wind,” Black said. “But it now doesn’t need a subsidy – research indicates fixed-price contracts would more than pay for themselves.

“So, given that the Government also knows it needs new low-carbon policies the question is, why not enable onshore wind where local people want it and where it won’t harm wildlife, while continuing to support a healthy mix of other low-carbon energy generation?”

Losing ground

Evidence suggests that onshore wind could have been developed at a strike price below £50/MWh even before the recent round of offshore wind auctions, which led to record-breaking low prices. This is cheaper than the £66/MWh forecast price for new gas-fired capacity, which would make onshore wind “subsidy-free” even when additional costs relating to intermittent generation are included, ECIU claims.

The UK is set to fall to bottom place among comparable EU nations for wind farm efficiency without investment in new technology, according to the report. It also notes that Britain risks losing its place as a global hub for onshore wind in manufacturing and installation, and in associated financial and legal services.

Offshore wind power played a prominent role in the landmark Clean Growth Strategy, released earlier this month, which set out how the Government intends to meet the fifth carbon budget. The Government has vowed to develop an “ambitious” Sector Deal for offshore wind, which it hopes will add an extra 10GW of new capacity by the 2020s.

George Ogleby

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie