Mark Latham
Deputy Business Editor
Influential Scottish economist Tony Mackay has claimed that the subsidies
paid to onshore wind farms in Scotland are “unnecessarily high” and have
led to “supernormal” profits for businesses and landowners.
In his July report on the state of the Scottish economy the Inverness-based
economist said that the subsidies received by wind farms has on average
been “between 2.5 and 3 times what was required to expand wind farm
capacity to meet Scottish Government [emissions] targets”.
While other countries often subsidise capital investment for electricity
generators, Mackay claims it is rare for companies to have their operating
costs and revenue subsidised as has been the case for the UK’s wind energy
sector for several years.
As a result, Mackay believes, electricity bills in Scotland are now around
10 per cent higher than they would be without subsidies and the UK
Government is right to reduce them.
“There is little doubt that these subsidies have been very generous and led
to the construction of a large number of wind farms in Scotland,” he said.
Even with the replacement of the overly generous Renewables Obligations
(RO) subsidy scheme with the more limited and competitive Contracts for
Difference (CfD) subsidies, the UK will still be “stuck with the current
shambles of subsidies for wind energy projects,” he said.
Mackay added that he agreed with the UK government’s plans, announced last
month, to scale back RO subsidies to onshore wind farms a year earlier than
planned, closing from April 2016.
Mackay’s claims have been rebutted by Joss Blamire, senior policy manager
of industry body Scottish Renewables, who told the Sunday Herald that
subsidies paid to onshore wind in Scotland have been cut by 10 per cent in
recent years and that subsidies add around 82 pence a week (or 7 per cent)
to the average annual Scottish electricity bill of £597.
“The future trajectory for onshore wind through the Contracts for
Difference (CfD) scheme shows significant future reductions can and will be
made.”
“Both the RO and CfD mechanisms were designed to cut costs, and this is
what they are doing – a process which could see onshore wind become the
first renewable energy technology to reach cost parity with fossil fuel
generation.”
Scottish Renewables claims that the proposed change to subsidies for
onshore wind could put up to £3 billion of investment and 5,400 jobs at
risk and that the plans will disproportionally affect Scotland which has
around 70 per cent of the UK’s onshore wind capacity.
“It is illogical and unfair to retrospectively cut support for onshore
wind, a sector which employs more than 5,000 people in Scotland and is
helping us meet our climate change targets at the lowest cost to consumers
of any renewable technology,” Blamire said.
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