Onshore Wind Blows Profits Offshore
Searching Cambrian Mountain Tops for New Wind Turbine Sites
by Pat Dodd Racher
We are going to need wind power.
We do not need wind farms imposed on communities by remote corporations or private equity funds.
Better to concentrate on community schemes, local energy for local use, but there are no signs yet that this approach is favoured by the UK’s Coalition government.
Here in Wales, decisions on the siting of wind farms with capacity exceeding 100 megawatts are not devolved, but are taken by the UK government, via the Infrastructure Planning Unit in the Planning Inspectorate, which operates within the Department for Communities and Local Government. Tracking the lines of responsibility is complicated, but as far as I can see, the lead civil servant for big infrastructure applications is Mr Mark Southgate, a chartered town planner, who is Director of Major Applications and Plans in the Planning Inspectorate, a post graded SCS1, a grade with a pay scale of £58,200 to £117,800 a year, according to information published by the Cabinet Office.
Wind energy is generously subsidised by us, through the Renewables Obligation component of our electricity bills. This system is due to last only until March 31st 2017, when Contracts for Difference should replace Renewables Obligation Certificates. The user will still pay, but rather than a fixed levy, the amount on the bill will reflect the difference between the price when the contract was signed and the price at the time of use. If the price has gone up, the user pays the difference. Should the price go down, the seller would refund the difference.
The Treasury intends to reduce contract prices. For onshore wind, the 2015-16 price would be £95 per MW hour, and in 2017-18, £90, which would be £50 per MW/hr less than for offshore wind, £20 less than for large-scale solar, and £15 less than for biomass.
Given the Treasury’s intentions to cut support for renewable energy (except biomass), it’s no surprise that generating companies are super-keen to get projects on stream before the end of March 2017, when the Renewables Obligation scheme is scheduled to end.
This dash for wind brings us to the upper Cothi valley in Carmarthenshire and to rumours of a large wind farm for the generating company Infinis Energy plc. It is known that some farmers in the upper reaches of the valley, where the bare Cambrian Mountains dominate the landscape west of Llyn Brianne, have been asked if they are interested in having turbines on the land they farm. The land itself is owned by the Crown Estates, which holds it on behalf of the Queen, and pays its revenue surplus to the Treasury.
Some 100 people from the upper Cothi area sat quietly in Pumsaint’s Coronation Hall on Wednesday February 5th to hear Sir David Lewis outline the likelihood of a wind farm on the Cambrian hill tops. Sir David, a corporate finance lawyer with the firm Norton Rose, formerly chair and senior partner, now consultant, and Lord Mayor of the City of London in 2007-08, lives at Cwrt y Cadno and so is very well placed to know about wind farm possibilities in the surrounding hills. He wants to protect, for future generations, the landscape integrity of the upper Cothi, and that means to protect from pylons as well as from turbines.
Infinis Energy is seeking sites for 36 turbines, Sir David told the meeting. The power cables from the wind farm would stretch from pylon to pylon down to Pumsaint and onwards to Llansawel, then to connect with the power transmission network from the wind farms in Brechfa Forest.
High-voltage cables could go underground, but research suggests that the cost could be in the range £10.2 million to £24.1 million per kilometre, according to data from the Institution of Engineering and Technology that was included in a notice from the Campaign to Protect Rural England.* Overhead high-voltage lines, according to the same notice, typically cost £2.2 million to £4.2 million per kilometre.
Electricity is best generated close to its consumers, to minimise transmission costs and problems, but the upper Cothi is remote and sparsely populated. With wind power, the transmission grid will be unused when there is no wind. The longer the transmission lines, the greater the ‘wasted’ costs of under-utilisation.
The Welsh Government identified, in Technical Advice Note 8, ‘strategic areas’ for wind farms. Brechfa is one of these, Strategic Area G, but the upper Cothi is not in an identified strategic area. However, as the decision whether or not to allow a wind farm here would be taken by the UK government, and not in Cardiff, the ‘strategic area’ designations might not carry much weight.
Infinis Energy plc, the company apparently seeking sites in the upper Cothi valley, is currently 68.56% owned by Monterey Capital II S.a.r.L, based in Luxembourg. Monterey Capital II is controlled by a chain of companies, in turn controlled by Mr Guy Hands, who lives in Guernsey. Until flotation on the London Stock Exchange in November 2013, Mr Hands’ control of the company was even more emphatic.
Profit and loss figures mean little when a company is controlled by a private equity entity, but when members of the public can buy and sell shares, they should be fairly confident that the company is aiming to be profitable. Will Infinis Energy plc be consistently profitable? The business made a pre-tax loss of £7.60 million in the year to end-March 2013, and another pre-tax loss, £4.91 million, in the six months to end-September 2013.
Yet Infinis Energy plc’s predecessor, Infinis Holdings, made a £44.3 million dividend payment to Monterey Capital II S.a.r.L at the end of the March-September reporting period. Infinis Holdings’ share capital was then acquired in its entirety by Infinis Energy Ltd, which re-registered as Infinis Energy plc on October 28th 2013, prior to flotation.
If Infinis does apply to build a wind farm in the upper Cothi, and at present it is ‘if’ and not ‘when’, a sizeable chunk of any profits would, it appears from the ownership structure, be destined for tax havens — Luxembourg, via Monterey Capital II, and then quite possibly Guernsey. The small communities of the upper Cothi would, meanwhile, be left with property blight and landscape degradation.
* ‘Little ambition to underground power lines’, notice from the CPRE, July 16th 2012