Electricity Bills Could Double To Bail Out New Wind Farms, Report Claims
Electricity bills could double to bail out new wind farms that have massively underestimated their operating costs, a former adviser to the World Bank has claimed.
Two offshore wind projects secured contracts to supply renewable energy at reduced costs in 2017 and it was hailed the result of huge strides made in technology and engineering, sparking hopes of a green jobs boom.
But Gordon Hughes, a professor of economics at Edinburgh University, claims that almost no attention had been paid to whether the contracts were sustainable and what would happen if they were not.
In a report for the Global Warming Policy Foundation, a climate sceptic thinktank, he argues that the possible outcomes were “stark”, likening the Moray East project in Scotland to a “very high stakes game of poker” and questioning how it could possibly be profitable.
“Either a consortium made up of large overseas energy companies and financial institutions is deliberately planning to lose money, or UK electricity customers will find themselves having to pay much higher prices so as to permit lenders to recover their loans and the developers to earn some kind of return on their equity,” he claims.[…]
The developers argue that they take on all the financial risk of delivering the Government projects and no costs will be passed onto consumers.
However, Prof Hughes claims that even if the Moray East project performed well above long term averages, it could only earn a reasonable return on equity if the revenue per megawatt hour was 50 per cent higher than the strike price.
“That in turn will require a market price for electricity that is slightly more than double the market price in the first half of 2019,” he notes.