Wind Power Braced for Hit as Conservatives Win in U.K.

(Bloomberg) — Developers that build wind farms on land
were braced for pain as David Cameron’s Conservatives won a U.K.
election promising to scrap support for the renewable projects
that his party’s supporters say blight rural landscapes.

His election manifesto promised to “halt the spread of
onshore wind farms” that it said are unable on their own to
provide the kind of capacity needed by a stable energy system.

Those comments along with Conservatives’ emphasis on steady
power supply suggest the government will tilt the U.K.’s power
system toward nuclear and natural-gas generation that’s more
easily controlled than renewables relying on the sun and wind.

“Although renewables output has grown significantly in the
last parliament, we regard Conservative policies as less
favorable in this area,” Graham Taylor, senior energy analyst
at Moody’s Investors Service, said in an e-mailed statement.

With all the major parties in Parliament backing stricter
emissions limits that will bring greenhouse gases under control,
the government will have to turn to more costly forms of
generation such as offshore wind and nuclear reactors to make up
for the limits it imposes on cheaper land-based turbines. Tidal
power may get a push to move beyond the experimental stage.

Manifesto Pledge

“Based on the manifesto and statements from the previous
coalition, the outlook for renewables is mixed,” said Doug
Parr, an activist at Greenpeace in London. “Whist renewables in
the English landscape are looking to have a dim future, marine
renewables like offshore wind and rooftop solar may still have a
decent future if previous promises are kept.”

Electricity from onshore wind currently costs about $85 a
megawatt-hour, cheaper than coal-fired power at about $97,
according to data compiled by Bloomberg New Energy Finance.

Halting the spread of onshore wind will likely push up
bills, Doug Parr, Greenpeace U.K. chief scientist, said after
the Conservatives made their policy clear ahead of the election.

It may cost “hundreds of millions of pounds every year in
more expensive alternative technologies,” Ian Marchant,
chairman of renewable developer Infinis Energy Plc, said after
the Conservatives outlined their policy ahead of Friday’s
election.

The government has already reined in support for solar as
tumbling panel costs and generous incentives made the often
overcast U.K. one of the hottest markets for the technology in
Europe.

Solar Plants

Last month, solar plants of more than 5 megawatts were
ruled ineligible for subsidies under the current system of
Renewables Obligations, which is being phased out. That forces
many developers to compete directly against cheaper onshore
wind, damaging the economic case for building them. Solar power
costs about $138 a megawatt-hour, according to Bloomberg
estimates.

Ed Davey, the Liberal Democrat who served as energy
secretary in the previous coalition government, lost his seat as
his party suffered a rout that will leave the Conservatives to
govern alone. While the Liberals were sympathetic to renewables,
Conservatives have stressed security of energy supply and local
people’s right to halt wind farms that some consider eyesores.

A new government is unlikely to cut the wind budget under
the current system, David Hostert, a Bloomberg New Energy
Finance analyst, said Friday. Under its new contracts-for-difference system, generators bid for guaranteed power payments
for 15 years. The first auction, to allocate 315 million pounds
($485 million) to 27 contracts, gave 15 to onshore wind.

“If anything, the auctions have so far delivered good
value for money to consumers,” Hostert said. It’s more likely
they would amend the planning process for new projects, he said.

To contact the reporter on this story:
Louise Downing in London at
ldowning4@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Tony Barrett, Ana Monteiro

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