Renewable Energy Foundation

REF will shortly publish major new analysis by Professor Gordon Hughes, under the title Wind Power Economics: Rhetoric and Reality.

The study contains two volumes, one on the Performance of Wind Power in Denmark and the other on Wind Power Costs in the United Kingdom.

On the basis of a large and detailed statistical analysis of audited accounts and other performance data Professor Hughes shows that far from falling dramatically, capital costs for wind power have come down only slightly, and that Operation and Maintenance (O&M) costs required to maintain energy yields are actually rising sharply, throwing the medium and longer term economics of the entire enterprise into jeopardy.

The study will be published shortly with a webinar, and anyone interested in being added to the mailing list for that announcement should write to us at REF at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

In the course of preparing this work and discussing it widely with colleagues we have become aware that the findings are surprising to many, particularly to some industry players who enjoy special circumstances unrepresentative of the overall wind sector.

An example of these special circumstances may make the point clear. Northern Ireland has several hundred small (< 250 kW) and apparently old turbines that are still making money. Some might say, and indeed REF has heard it said, that the empirical experience of these wind turbine operators should count for more than statistics, even if the statistical analysis is based on real cost data from audited accounts and authoritative records of real generation such as that behind Professor Hughes’s study.

While speciously persuasive this proves to be a good example of how dangerous it is to rely on limited, personal or anecdotal information when forming a general view. Uncle Wilfred may indeed have lived to a hundred on a diet of cigars and whiskey, but that is no recommendation for the rest of us. By the same token, closer examination of the situation in Northern Ireland shows it is no guide to the rest of the sector.

The Northern Ireland wind fleet contains 1,236 sites of 5,000 kW in capacity or less, with a total capacity of 218 MW. A significant number of these are around 250kW (798 with a total installed capacity of 214MW). As it happens, these are not old machines: 83% of these were commissioned after 2014 (661 sites with a total capacity of 151 MW).

In fact, some 449 sites (106 MW) were commissioned after the 1 January 2016, slipping under the wire before the subsidy system closed down.

The false impression of age for some of these machines results from the fact that many of them were obtained second-hand from Denmark, after over twenty years in operation. However, these decommissioned machines were reconditioned before sale, with new generators, gearboxes, and blades, as well as benefitting from new foundations and other ancillary equipment. In spite of the fact that the nacelles and the towers are reused, along with some other components, for the purpose of ageing they are new machines.

One should note also that a 250 kW turbine is small and indeed obsolete by modern standards. Such machines do not represent the modern industry. The regular modern onshore turbine since 2005 has been greater than 2 MW (2,000 kW), eight times larger in capacity, and today developers think of 3 MW, and 4 MW, and even 5 MW machines as normal. One of the findings of Professor Hughes’ analysis of performance in Denmark suggests that the early generations of wind turbines were considerably more reliable than later iterations, perhaps because of lighter engineering loads, or because the designers were under less pressure to reduce the costs and so could afford to over-engineer the devices, increasing capex but reducing longer term opex.

Furthermore, and critically, the subsidy regime was and is extremely favourable to small scale wind in Northern Ireland. The Feed-in Tariff (FiT) for small scale generators available from 2010 in the Great Britain, was not open to applicants in Northern Ireland. The original UK Government position in February 2010 was that “The [FiT] Scheme will apply across England, Scotland and Wales. Northern Ireland will need to develop their own legislation.”  However, such legislation was never developed by the Northern Ireland government.

Instead, special bands of the Renewables Obligation were created to give equivalent levels of support, with small-scale wind receiving 4 Renewables Obligation Certificates (ROCs) per MWh. Surprisingly, this generous banding was maintained up to the early closure of the RO to wind in 2016, even though the Feed-in Tariff subsidy rates for wind in the rest of the UK were declining sharply in order to reduce what was widely acknowledged to be unduly high levels of support in the first years. It is particularly surprising in view of the fact that government did down-band small scale solar and some other technologies in Northern Ireland. Wind alone was left with an anomalously high subsidy.

Consequently, the continued existence of the 4 ROC banding for small wind turbines meant that registration in the RO presented an extremely lucrative opportunity, especially in the relatively favourable wind conditions of Northern Ireland. In early 2016, when the rush for small wind in Northern Ireland was gathering pace, a ROC was worth about £45, so the total subsidy per MWh came to about £180/MWh. On top of that the wind turbine would also have earned the wholesale price, which stood then stood at about £50/MWh, giving a total income of around £230/MWh, more than four times the wholesale price.

For comparison, the UK Feed-in Tariff for small scale wind of 250 kW deployed in early 2016 was about £61/MWh (+ a little extra for the export tariff on part of the output) and fell rapidly month by month for sites deployed after this time.

For a further comparison, when the RO closed to larger onshore wind in England the allowance was 0.9 ROCs per MWh, giving them a subsidy of about £40/MWh, still generous but nothing like that available to small wind in Northern Ireland, which was a very special case, being almost completely de-risked at the expense of all UK electricity consumers.

Table 1: A comparison of the subsidy rates awarded to 250 kW wind farms by the different UK administrations and how the rates have changed over time. The Renewables Obligation (RO) subsidy is calculated on the basis of the banding available for the installation in its year of accreditation and assumes a Renewables Obligation Certificate (ROC) value of £55. In addition to the RO subsidy, the wind farm can receive the wholesale electricity price, which is currently approximately £35 per MWh. The Feed-in Tariff (FiT) subsidy is only available in England, Wales and Scotland, and the level of this subsidy for wind projects dropped rapidly from the initially high levels set in 2010. The rates are annually increased in line with the Retail Price Index (RPI). The values in the table are the RPI-adjusted tariffs that apply from the 1st of April 2020 to the 31st of March 2021. In addition to the FiT subsidy, wind farms under this regime can receive an export tariff, which amounted to £39 per MWh up to 2013, and £55 per MWh thereafter.  Both RO and FiT support lasts for 20 years after accreditation.

* Small wind sites built in England, Wales and Scotland prior to the introduction of the FiT in 2010 were permitted to transfer from the RO mechanism to the FiT in 2010 and receive a specific RO-migrated tariff.

As if this were not generous enough, small scale wind was actually able to register for the Renewables Obligation in Northern Ireland until 1 July 2016, some weeks after it had closed to onshore in Scotland, England, and Wales (13.05.16), and due to grace period extensions small scale wind was still able to enter the system up to 31 March 2019, and the most recent accreditation currently visible in the records dates from that month indicating that developers have taken full advantage of the privilege.

The stampede for small scale wind in Northern Ireland is over, but the costs linger on, since the Renewables Obligation offers its support for 20 years, burdening the consumer and also, incidentally, creating the false and misleading impression that older turbines can be profitable. These aren’t old machines, and the subsidy levels are extremely high.

At present, while the Northern Irish wholesale price is low at £37/MWh, the value of a Renewables Obligation Certificate is over £55, giving a total of £257/MWh, a figure that produces high income even at low load factors and stellar income at higher load factors.

For example, the 250 kW wind turbine known as Carness Rock in Ballymena, generated 1,308 MWh in the year to January 2020. It will have cost the electricity consumer approximately £288,000 in subsidy in that year and earned a further £48,000 in wholesale income. Carness Rock is one of the best performing 250 kW sites, but quite a few are in that income bracket and even the middle of the distribution has nothing to complain about.

The consumer, on the other hand, might feel aggrieved. Records show that the total Northern Ireland small wind fleet of 950 sites received approximately 1.3 million ROCs in the year ending December 2019. Assuming a price of £55 per ROC that is approximately £71 million in subsidy, in return for which they generated a modest 324 GWh of electrical energy. This represents about 4% of electrical energy consumed in Northern Ireland (7,500 GWh of for the year June 2019 to July 2020). By any standards, subsidised small wind in Northern Ireland is a minor contributor, and provides only very expensive carbon abatement, well in excess of even extreme estimates of the Social Cost of Carbon.

In summary, the Northern Irish small scale wind fleet is anomalous in various ways, and is extraordinarily heavily subsidised, with the consequence that it is all but completely insulated against opex risk. The so far positive experience of the owners of these wind turbines is not a sound guide to what is going on in the rest of the sector, which employs much larger, modern and less reliable machines with much lower rates of subsidy, and, in the case of offshore wind, has bid for Contracts for Difference (CfDs) at levels that are well below the price required for economic operation, as REF’s forthcoming study will demonstrate definitively.