This deal is about the future of Scotland’s, and the UK’s, energy system. Wind power will be the backbone in the shift to net zero carbon emissions as we electrify heat supply, get from A to B in electric vehicles and power factories and furnaces with hydrogen made from water. The commitment to fossil fuel-free electricity in the ten years since the Climate Change Act came into force has led us at Vattenfall to invest more than £3.5 billion in building 12 wind farms. With our pipeline, we could easily match that level of investment in the next ten.
And while the UK government, and Scottish for that matter, have to their credit backed offshore wind, ministers in Westminster have failed to support onshore wind since 2015 – and the sector is struggling.
This is why they should support growth in the onshore sector: it’s cheap, fossil fuel-free, boosts the economy, can be built quickly and it’s popular.
To reap the benefits of onshore wind, the UK government should agree a fixed price for the electricity new projects generate. Called a contract for difference, it will run for 15 years and not cost the consumer an additional penny. In effect ‘subsidy-free’.
One of onshore wind’s strengths is that it’s the cheapest way to generate electricity. But to justify building it, investors need stability in the price of electricity they receive for the power new wind farms will produce. This can come from power purchase agreements with intensive energy users, but there are not enough agreements to go around, leaving much of the sector facing grave uncertainty. This could leave a big hole in future zero carbon electricity supply in Scotland and the UK.
The beauty of the contract for difference mechanism is that if future wholesale market prices exceed your fixed agreed price then the generator pays back the difference. Consultant BVG Associates estimates shovel-ready onshore projects in the UK would collectively return £1.6bn to consumers over the lifetime of their 15-year contracts.
Onshore wind will also create thousands of jobs and deliver a boost to Scottish businesses. And if that is not enough, five gigawatts of new onshore wind capacity in the UK would prevent over five million tonnes of CO2 entering the atmosphere each year.
You can see why onshore wind is popular. A vote winner even. Survey after survey demonstrates high levels of support.
The industry has never had an adequate explanation for this deal being left on the table by the UK government. As consensus builds on hitting net zero carbon emissions in Scotland by 2045, a challenging target, it would seem foolhardy not to back onshore wind.
- Danielle Lane, UK country manager, Vattenfall.