Energy: Wind Farms

Lord Teverson Excerpts

Wednesday 9th November 2011 Lords Chamber

[Lord Teverson]

My Lords, I am very aware that I am not a resident of Wales so I shall be careful in what I say. However, some months ago, as part of a business trip—nothing to do with energy or renewables—I passed through central Wales. I stayed there for the evening and enjoyed the hospitality, the scenery and the countryside. I noticed a number of signs and placards there around renewable energy, so I fully accept that this is a major issue in that area. I live in another Celtic part of the United Kingdom, one that has high wind potential with regard to renewable energy. It has a number of wind farms and similar issues to those of Wales, although maybe not to the same degree.

It is important to remember the slightly broader context to this debate—that is not a justification, but it puts the debate in a broader context—of global warming and the need to decarbonise our electricity supply chain in this country and indeed further afield than that. Global warming exists, it is happening, it is dangerous and it will have major effects not just on our own country but much more widely. The Berkeley earth surface temperature study has recently taken place. A study that was originally very sceptical about the question of temperatures and global warming looked at the University of East Anglia results and the controversy about the Hadley Centre, and came back to say that global warming was really happening.

We have to go through the process of decarbonisation and the Government have some excellent strategies towards that: energy efficiency; new nuclear, which some of my colleagues might disagree with rather more; carbon capture and storage; and renewables. Why those four different things? Because this is such an important issue that we cannot have just one approach to it. We have to have a multifaceted approach to the problem, and that is true of electricity generation as well.

One small point about the KPMG report is that onshore wind generation is not one of the most expensive technologies but quite the opposite: it is actually one of the least expensive. Offshore wind, wave, geothermal and various other technologies are more expensive than onshore wind; that is not even slightly contestable. The other thing about the report—and I was rather surprised that KPMG put its name to something that was so shaky in its economic analysis—is that it looks purely at capital cost. Those of us who have had anything whatever to do with business or industry understand that, in terms of cash flow or assessing projects, looking only at capital cost means nothing. In fact, if we looked purely at that, we as a civilisation would still be in the stone age rather than where we are now. Some people might welcome that, but I personally am not one of those who are into deindustrialisation.

The important thing about renewables is that the ongoing fuel cost is far less. If we look at those countries such as Denmark and Spain that bothered to invest in renewables way back in the past, we see that the energy prices where there is a much higher renewable content have not increased at anything like the rate that our own energy costs have in the UK. I remind the Minister that in the five-year period 2004 to 2009, electricity costs went up by 75 per cent and gas costs by 120 per cent—far higher than any costs that would have resulted from renewable energy.

In fact, if we invest suitably in renewable energy we will have a much lower cost increase in future. Onshore wind generation is a good solution in terms of renewable energy and decarbonising the economy and a good way of tackling global warming. One of the cheaper ways of producing renewable energy is hydro—including dams in the type of area where my noble friend, quite rightly, campaigned. However, there is less ability in the UK to build extra hydro than onshore wind generation.

The crux of this argument, with which I absolutely agree, is about the concentration of wind turbines in a particular area and providing access to the national grid, such as by building pylons. I have sympathy for Wales, and central Wales in particular, because the plans that have come back to the Welsh Government have delineated specific areas and there is a problem with that. What is required is for the Welsh Assembly and Government to look at changing those criteria and moving it away from DECC, which should not make those sorts of decisions for the UK. We would then have the right solution for Wales that would also challenge and affect global warming.