More money leaves the room. Last week David Cameron said the UK needed to get rid of all that green crap (or double-speak words to that effect). The message, confounded as it is, may be getting through.
(Reuters) – German utility RWE has scrapped plans to build one of the world’s largest offshore wind parks in Britain, as soaring gas and electricity prices fuel uncertainty over the UK government’s commitment to renewable energy subsidies.
[Bloomberg] RWE’s renewable-energy unit has decided to drop a 4.5 billion-pound ($7.3 billion) offshore wind project in the U.K. because engineering challenges made it too expensive.
RWE says that it’s because of engineering challenges, but we could assume they didn’t suddenly discover how deep the water was this week.
[Bloomberg] “At the current time, it is not viable for RWE to continue” the Atlantic Array farm because of deep waters and adverse seabed conditions, RWE Innogy said in a statement on its website. The 278-turbine project in the Bristol Channel can’t be justified under “current market conditions,” it said.
Engineering challenges can usually be fixed with money. But translate “current market conditions” and we see that it was really a money challenge: not enough taxpayer money to line the deep sea.
While this development (or non-development as it happens) is good news for the people of the British Isles, they are still paying for all the other projects that should have been canceled.
“The average household power bill has risen 68 percent since 2008…”
In response Ed Milliband (Opposition leader) did what any big-government anti-free-market politician would do. After big-government has spent years commanding that energy should be unaffordable (so we’d use less), his solution is that governments should also command the price to stay the same. It’s fairies in the garden stuff: the hunt for the mythical free lunch, the instant fix, the Stalin solution. (Scarily, 4 out of 5 voters like it).
When there is no free market, a price freeze means a capital freeze. So be it:
[Guardian] Peter Atherton, a leading energy analyst, warned last week that investment in power generation was “killed stone dead” until the next election by Ed Miliband‘s call for a price freeze and government delays in introducing promised electricity market reform.
Reality bites. Note the implication, and the language:
But the pullout will also raise concerns about the investment landscape in Britain for energy companies such as RWE, which have been under ferocious attack by politicians, regulator and the public.
What the green market calls a ferocious attack is normally called competition.
RWE indicated that the government might have to raise green subsidies – and thus increase bills or the burden on the taxpayer – after admitting that technical difficulties had pushed the price up so far that it could not be justified under the current subsidy regime.
It’s not the only project on the slide.
But RWE has already pulled out of a £350m nuclear-power project, is selling its DEA North Sea oil business and last week disposed of part of its UK gas and electricity supply arm. Developers have been warning for some time that they would need more subsidies from the government if ministers were to realise low-carbon energy targets
When it costs too much, the answer is more subsidies.
When the subsidies don’t come:
Renewable energy companies have promised to try to reduce offshore wind costs by 30% through a raft of measures as government ministers are under pressure to reduce public subsidies.
If they can reduce costs by 30% now, why not do it before? Oh wait…
At last estimate a billion dollars a day was being poured into “climate” investments. Now, it’s $7billion less.
Read more at the Guardian.
h/t Rereke :- )