Wind Power Braced for Hit as Conservatives Win in U.K.

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Developers that build wind farms on land were braced for pain as David Cameron’s Conservatives won a U.K. election promising to scrap support for the renewable projects that his party’s supporters say blight rural landscapes.

His election manifesto promised to “halt the spread of onshore wind farms” that it said are unable on their own to provide the kind of capacity needed by a stable energy system.

Those comments along with Conservatives’ emphasis on steady power supply suggest the government will tilt the U.K.’s power system toward nuclear and natural-gas generation that’s more easily controlled than renewables relying on the sun and wind.

“Although renewables output has grown significantly in the last parliament, we regard Conservative policies as less favorable in this area,” Graham Taylor, senior energy analyst at Moody’s Investors Service, said in an e-mailed statement.

With all the major parties in Parliament backing stricter emissions limits that will bring greenhouse gases under control, the government will have to turn to more costly forms of generation such as offshore wind and nuclear reactors to make up for the limits it imposes on cheaper land-based turbines. Tidal power may get a push to move beyond the experimental stage.

Manifesto Pledge

“Based on the manifesto and statements from the previous coalition, the outlook for renewables is mixed,” said Doug Parr, an activist at Greenpeace in London. “Whist renewables in the English landscape are looking to have a dim future, marine renewables like offshore wind and rooftop solar may still have a decent future if previous promises are kept.”

Electricity from onshore wind currently costs about $85 a megawatt-hour, cheaper than coal-fired power at about $97, according to data compiled by Bloomberg New Energy Finance.

Halting the spread of onshore wind will likely push up bills, Doug Parr, Greenpeace U.K. chief scientist, said after the Conservatives made their policy clear ahead of the election.

It may cost “hundreds of millions of pounds every year in more expensive alternative technologies,” Ian Marchant, chairman of renewable developer Infinis Energy Plc, said after the Conservatives outlined their policy ahead of Friday’s election.

The government has already reined in support for solar as tumbling panel costs and generous incentives made the often overcast U.K. one of the hottest markets for the technology in Europe.

Solar Plants

Last month, solar plants of more than 5 megawatts were ruled ineligible for subsidies under the current system of Renewables Obligations, which is being phased out. That forces many developers to compete directly against cheaper onshore wind, damaging the economic case for building them. Solar power costs about $138 a megawatt-hour, according to Bloomberg estimates.

Ed Davey, the Liberal Democrat who served as energy secretary in the previous coalition government, lost his seat as his party suffered a rout that will leave the Conservatives to govern alone. While the Liberals were sympathetic to renewables, Conservatives have stressed security of energy supply and local people’s right to halt wind farms that some consider eyesores.

A new government is unlikely to cut the wind budget under the current system, David Hostert, a Bloomberg New Energy Finance analyst, said Friday. Under its new contracts-for-difference system, generators bid for guaranteed power payments for 15 years. The first auction, to allocate 315 million pounds ($485 million) to 27 contracts, gave 15 to onshore wind.

“If anything, the auctions have so far delivered good value for money to consumers,” Hostert said. It’s more likely they would amend the planning process for new projects, he said.

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