Winds of Change – Onshore Wind Farms Now Eligible for Government Subsidies

Mayank Tripathi discusses some of the most recent developments in wind energy and what this could mean for the energy sector.

Earlier this month Prime Minister Boris Johnson removed the moratorium on subsidies for onshore wind farms. The moratorium had been put in place by David Cameron in 2016 due to growing pressure from Conservative MPs. It was argued that onshore wind farms were not popular in rural communities due to the adverse impact on the visual effect of the landscape and birdlife. As a result of the moratorium, onshore wind was excluded from government subsidies for low carbon electricity projects.  

However, in 2019 the UK committed to net zero carbon emissions by 2050, and the Government has been pressurised to take more steps to meet this target. Diversifying the sources of energy production in the UK i.e. the country’s “energy mix” and reducing dependence on fossil fuels is one of the key ways to reduce the country’s carbon emissions. The Government has recognised this fact and the provision of subsidies will lead to an increase in onshore wind farms.  

While the UK has the world’s largest offshore wind capacity, offshore wind farms tend to be more expensive to construct since developers have to transport and construct turbines deep in the ocean. However, offshore wind farms had not been subject to the moratorium and in 2019 the Government even projected that wind energy will supply 33% of total electricity demand by 2030. Now as a result of provision of subsidies to onshore wind projects, this percentage can be expected to further increase.  

Furthermore, unless developers are large conglomerates such as General Electric, they have to engage in off-balance-sheet financing and borrow loans to finance projects. This is especially important for renewable energy projects since their costs tend to be front-loaded – they are expensive to set up but provide savings over time. With interest rates at a historic low, one would think this is the perfect opportunity for companies to obtain cheap loans and build wind farms.  

However, due to the ongoing Covid-19 pandemic and growing concerns of a recession resembling the 2008 financial crisis, the development of wind projects is likely to grind to a halt. Moreover, with governments looking to provide fiscal support to the economy, subsidies for renewable energy projects could also be withdrawn in the short term. 

The oil war between Russia and Saudi Arabia has driven oil prices to their lowest levels in 17 years. As a result, fossil fuel producers are likely to shift focus to increasing production of natural gas. This will lead to cheaper natural gas and make renewable energy less competitive. However, it can be argued this is a short term impact and long term, the volatility of oil prices is likely to encourage adoption of cleaner energy sources.  

Critics of wind energy raise the argument that wind farms pose an environmental problem once a wind turbine is retired. While up to 85% of the turbine is recyclable, the blades themselves continue to raise an environmental question. 

Transporting the blades in itself can be an expensive procedure – the fibreglass blades have to be cut into three using a diamond encrusted industrial saw before the can be transported. Since the blades are built to withstand extreme temperatures and winds, they are not easily repurposed or recycled. The EU has tried burning the blades to make cement but this also leads to pollution being emitted into the atmosphere. The cheapest and fastest solution is burying the blades in landfills. In Europe, up to 3,800 blades will be buried annually by 2022. However, fibreglass is not biodegradable and this poses an obvious environmental threat.  

However, given the growth in activity in the sector, a number of companies have identified a gap in the market and are trying to come up with eco-friendly solutions to the problem. Global Fibreglass Solutions, an American company, has developed a way of crushing the blades into pellets and fibre boards to be used for flooring and walls. Danish company Miljoskarm has proposed an even more novel solution – grinding the blades into centimetre sized pieces and then placing them in cases with industrial glue to absorb sound from highways and factories. As the sector continues to grow, start ups and companies like Global Fibreglass and Miljoskarm are going to present lucrative investment opportunities and receive support from their governments.  

By Mayank Tripathi