Of all the issues that could have caused division in the UK’s Coalition Government, support for the deployment of onshore wind was not originally a leading contender. Indeed, in the early days of the Coalition, the environmental agenda seemed to be one of few areas of genuinely common ground between the Liberal Democrats and their Conservatives in what the Prime Minister anticipated would be the ‘greenest government ever’.
Nonetheless, it is increasingly clear that there is deep-seated hostility to onshore wind turbines from significant parts of the Conservative party and now also from ministers in the Government itself.
The charges against onshore wind are wide-ranging, covering everything from their expense to their visual impact on the landscape.i WHEB Asset Management does not currently hold wind farm developers or wind turbine manufacturers in the IM WHEB Sustainability fund. We are however enthusiastic about the contribution that wind power can make to low carbon electricity generation. We have invested in wind-farm developers and turbine manufacturers in the past, and we will continue actively to monitor the sector as a source of potential investments for our fund.
The costs of onshore wind
Our enthusiasm is ultimately rooted in our view that the scientific evidence of human-induced climate change is clear and compelling, and that the global economy needs to rapidly decarbonise. A big part of this decarbonising has to happen in electricity generation and onshore wind power can play a pivotal role in achieving this. Onshore wind is already the cheapest form of renewable energy and is expected to retain this position for the foreseeable future through reductions in the cost of operations and maintenance which have fallen 38% in the past four yearsii, better technology and cheaper wind turbines and other capital equipment. Electricity generated by onshore wind costs more or less the same as gas when a carbon price is imposediii and is cheaper if carbon capture and storage is required as the Committee on Climate Change believes should be the case for new gas plants from 2020.iv
Of course wind power is intermittent – a key part of the case against further deployment of the technology. This is clearly a challenge, but need not be insuperable. Some back-up generation capacity will inevitably be required (estimates suggest 20-32% of the renewable capacityv), but this can be further supplemented through non-generation measures such as greater interconnection with other countries, greater capacity for energy storage and demand-side management (e.g. smart grid applications).
Another key – perhaps the key – objection is simply on the basis of the aesthetics of wind turbines. This is a topic that raises heated debate – not least within the Beloe family (my wife seeing them as rather ugly) and is one of the principle drivers for constructing (more expensive) offshore wind farms. Clearly this is a very subjective issue. My wife believes that I only like the look of wind turbines because I value the low carbon energy that they produce. If you don’t value what they do because you are sceptical about climate change and/or see them as a very intrusive statement of big government (or big business) then the aesthetics take on a very different meaning.
Impacts on household bills
Anti-wind farm campaigners are not the only ones to be concerned about the impact of renewable energy deployment on household electricity bills, not least because of the substantial increases in household bills in recent years. The UK’s Department of Energy and Climate Change addressed this question head-on in 2011 and found that the vast majority of price increases were due to the increasing cost of fossil fuels particularly gas, with renewables policies adding just 2% to the average household bill.vi
The Committee on Climate Change has also weighed in on this issue seeking to forecast what the impacts of further anticipated support for renewables will be on electricity bills out to 2020. Their conclusion was that of a projected total average household energy bill of £1,250 in 2020, compared to £1,060 in 2010, total costs of £130 per household would be for measures to support low-carbon investments and a further £60 supporting energy efficiency improvements in homes. Approximately the same amount will be added again from increases in the anticipated wholesale gas price.vii
Energy infrastructure for the 21st Century
There are other objections to wind farms including their potential impact on sleeping patternsviii, and of course there are other arguments in their favour such as the jobs that a domestic wind industry is creatingix, ultimately though, as the Department of Energy and Climate Change is fond of saying, UK energy policy needs to deliver three key strategic objectives: it has to be 1) affordable, 2) reliable and 3) low carbon. Every energy generation technology has its faults and onshore wind is no exception. It is clearly not a panacea, but it is a technology that, in our view, performs well in delivering on these objectives and should remain a staple within the UK’s energy mix as we rebuild an energy infrastructure fit for the 21st Century.