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26 July 2010

All power to the wind – it cuts your electricity bills

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ATTEMPTS to discredit wind power often claim that wind turbines need to be subsidised.

A piece in British newspaper The Daily Telegraph last month asserted that each wind turbine in the UK receives, on average, £138,000 in subsidies a year, and that as a result wind-power investors are coining it hand over fist at the taxpayer's expense.

So are wind farms subsidised? In the sense of direct government support, very rarely. What they do enjoy in most countries, though, is a guaranteed right of access to the grid, and minimum prices for the electricity they produce.

These rights are imposed either directly - by so-called feed-in tariffs - or indirectly via an obligation on electricity producers to generate a certain proportion of their output from renewable sources.

The regime is designed to create an environment favourable to wind power, but it is not funded by the taxpayer. Feed-in tariffs are paid by the companies that transmit electricity, such as National Grid, while producers pay to meet their renewables obligation. In both cases the cost is eventually passed on to consumers. In other words, it is not your taxes that support wind power, but your electricity bill.

This may seem like cold comfort. However, it has an unexpected upside: you end up paying less for electricity when wind power is part of the mix.


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