Thursday, 24 March 2011

EU chief climate alarmist: Wind power is "very, very cheap"

(Sometimes there are problems with wind turbines - even in Denmark)

In the wake of the nuclear disaster in Japan , EU climate change commissioner, former Danish journalist Connie Hedegaard is praising offshore wind energy:

 "Some people tend to believe that nuclear is very, very cheap, but offshore wind is cheaper than nuclear. People should believe that this is very, very cheap."

But, as usual, Hedegaard does not know what she is talking about. German Der Spiegel has looked into the costs - particularly for the consumer - of offshore wind parks:

According to information obtained by SPIEGEL ONLINE, the government plans to raise the feed-in tariff paid to the operators of offshore wind farms from €0.15 to €0.18 per kilowatt hour (kWh). In return for this higher rate, the subsidy's duration will be pared down from 14 months to nine months. The energy industry, at least, is adamant about this last point.
This would entail the second increase in subsidies for offshore wind energy within just a few years' time. For their electricity, wind farm operators would receive more than three times the going rate for energy on spot markets.
But although this would be a boon for investors, it would only mean additional costs for consumers over the long term. The electricity lobby argues that the money companies would get upfront from the higher subsidy rate would leave the total cost to the government and taxpayers unchanged due to its shorter duration. But the money for these wind-energy subsidies comes from surcharges on the utility bills of German households, known as a Renewable Energy Act (EEG) assessment. Since that money would be taken out of consumer pockets and put into company pockets earlier, the latter would reap the benefits of having that capital on hand.

Likewise, the guarantee of higher profits does not reduce the massive risks investors assume in setting up an offshore wind farm. "Building a wind farm often gobbles up more than a billion euros," Albers says. For investors, insecure terms are often the rule. The technology has yet to be proven. In recent years, major electric utility companies, such as E.on, RWE and Vattenfall, and smaller builders of wind-turbine facilities have been forced to suffer a number of setbacks.

In an earlier article, Der Spiegel came to the same conlusion:

 In the first nine years, at least, electricity customers could expect to see substantially higher EEG assessments on their electricity bills, while the utilities' profits would go up considerably. For them, the implementation of the model would be a real coup. They would receive the government subsidies within a significantly shorter time period and, after nine years, could sell the electricity from the wind farms, which will have been written off by then, at market prices.

As a result, the value of the operating companies would rise on the utilities' balance sheets, and so would the profits from the offshore wind farms. According to KPMG calculations, profits would go up from about seven percent today to almost 12 percent.
The industry hasn't been able to make such profits with its newly built, conventional coal and natural gas power plants in years. Nevertheless, the German Environment Ministry can apparently reconcile itself with the model. Its reasons are entirely pragmatic. According to ministry officials, the construction of offshore wind farms is now so far behind schedule that it is a pleasant surprise when anything happens at all.

Here we go again! (as Ronald Reagan used to say). The unelected EU bureaucrats live in their own cosy world, with a lot of tax payers´ money to throw around. It does not bother them the least - because they do not have to face the voters - that it´s the consumers who end up paying for all these "very, very cheap" wind energy farms.

1 comment:

Sean said...

"Cheap, is seldom a deal."