Almost everybody agrees that wind turbines are ugly and inefficient. But you’d think that the government, if it must persist in subsidising renewable energy, would do everything it could to incentivise wind power producers to create as much energy as possible while keeping the aesthetic damage to a minimum. Astonishingly, it is doing the opposite.
Inquiries by The Spectator have revealed a scam known as ‘de-rating’. Green businesses are modifying large turbines to make them less productive, because perverse government subsidies reward machines that produce less energy at nearly double the rate of more efficient ones. It’s extraordinarily profitable for a few beneficiaries, even if it clutters the countryside and does little to save the planet.
Under the government’s Feed-In Tariff (FIT) scheme, which aims to make renewable energies competitive with fossil fuels, the size of a turbine is measured not by height but by power output. If a turbine pumps out more than 500kW, its owners receive 9.5p per kilowatt hour. But a ‘smaller’ sub-500kW one receives a subsidy of 17.5p per kilowatt hour, supposedly to compensate for its lower efficiency. The idea is to lure smaller wind-power producers into the market.
Problem is, while smaller turbines are more popular with the public, those designs don’t produce anything like the 500kW needed to take full advantage of the subsidy. So instead, investors are buying big, powerful turbines and downgrading them, tweaking their components to churn out no more than the magic 500kW. It’s simply far more lucrative to hobble bigger turbines — machines that ought to be capable of producing almost twice as much electricity.
For instance, it would cost a farmer roughly £1.5 million to plan, buy and put up a single 80-metre turbine, which could produce up to 900kW. He could run it at full capacity, and see a 7 to 10 per cent return on his investment each year. But if the machine’s efficiency were lowered, industry sources suggest, the return would jump to between 17 and 20 per cent. Clearly, the under-500kW subsidy bracket is where the money is. Last year, Ofgem reported a 850 per cent rise in FIT approvals for 100 to 500kW turbines, compared with 56 per cent for the 500kW to 1.5mW category.
Turbine suppliers boast about selling products that take advantage. The German firm PowerWind says on its website that it has developed its PowerWind 500 turbines ‘especially for the UK market’ and encourages potential customers to ‘secure the highest FIT in Europe’. In other words: turbines designed especially to game British subsidies.
Or take EWT, a Dutch manufacturer of wind turbines. Its website lists the giant DW 52/54 turbine — as tall as seven double-decker buses — in two forms, one producing 500kW and the other 900kW. Why such a difference in power output, if the specifications suggest they’re the same machine? A sales representative from EWT explains that it offers the less-productive model because ‘the tariff is very, very advantageous’. So why buy the less efficient model, when it has the same environmental footprint? Because ‘you have a better return on investment… you get more money per kilowatt’. The EWT salesman conceded the British system is ‘very very strange’. It’s all about the subsidy, not the environment.
Neither company could be contacted for comment.
One would imagine the government would be appalled at an abuse so widespread that turbine companies advertise specially crocked machines. In a recent report, the Department for Energy and Climate Change said it is fully aware of the loophole. But closing it would not ‘necessarily bring net benefits and could potentially limit access to the scheme’. They have renewable energy -targets to meet — and closing the scam down would see the number of turbines installed reduced. And if the same amount of energy could be produced by half as many turbines? They’re not interested. Not even the department, it seems, cares about the environment.
In the next few days, the Department for Energy will lower Feed-In Tariff rewards for all wind turbines. But it refuses to do anything about ‘de-rating’. It’s already depressing to see a massive turbine scar the countryside. It’s worse when you know these some of these machines are far larger and less productive than they should be. If George Osborne is looking for extra cuts ahead of his mini-budget next month, he may find inspiration as he looks out of his window on the journey to Dorneywood.
This article first appeared in the print edition of The Spectator magazine, dated 24 November 2012