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Myth 8. Wind power is expensive and heavily subsidised Fact: The cost of generating electricity from wind has fallen dramatically over the past few years. Between 1990 and 2002, world wind energy capacity doubled every three years and with every doubling prices fell by 15%7. Power generation costs are determined by the installed costs of the plant (including interest during construction), operation and maintenance costs, fuel costs, energy productivity, cost of capital and the capital repayment period. In the case of wind energy, the fuel – the wind itself – is free. Wind energy is competitive with new coal and new nuclear capacity, even before any environmental costs of fossil fuel and nuclear generation8 are taken into account. The average cost of generating electricity from onshore wind is now around 3-4p per kilowatt hour, cheaper than new nuclear (4-7p)9. As gas prices increase and wind power costs fall – both of which are very likely – wind becomes even more competitive, so much so that some time after 2010 wind should challenge gas as the lowest cost power source. Furthermore, the wind is a free and widely available fuel source, therefore once the wind farm is in place, there are no fuel or waste related costs. When the full costs of the environmental damage caused by fossil fuels and nuclear power are taken into account, wind power is an even better buy. For example, it has been estimated that if the cost of environmental damage were included, the price of electricity from coal would be three times higher than electricity from the wind. The full costs of nuclear power, including dealing with highly-radioactive waste and decommissioning of old plants, are still not included in the price of electricity after decades of operating stations in the UK, and the nuclear industry is still dependent on massive Government subsidy. There is no Government subsidy for building wind farms. As much as £2 billion of private investment has been made in the UK wind industry. The support mechanism – Renewable Obligations Certificates (ROC) - is only available for electricity that wind farms have already produced and supplied to utilities. The cost to the consumer of supporting the initial development of wind power in the UK has been very small. The Non-Fossil Fuel Levy, set up at the time of electricity privatisation, supported all non-fossil fuel sources of electricity: nuclear power and renewable energy. However, almost 90 per cent of that subsidy went to the nuclear industry. The Government has replaced this arrangement with the Renewable Energy Obligation, which encourages electricity suppliers to provide up to 10 per cent of their electricity from renewable sources by 2010. |
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