back to article Hooking offshore wind farms into UK grid will HIKE bills, MPs warn

It is "unlikely" that a new licensing system intended to connect offshore wind farms to the national grid will save consumers money, an influential committee of MPs has warned. In a report, the Public Accounts Committee (PAC) said that the offshore transmission operator (OFTO) licensing regime could instead "lead to higher …

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Meh

Re: destruction

It when they got planning permission to stick them into the Irish Sea in an area the size of Devon and Cornwall that it all went mad. The maintainance costs appear to be outweighing the production of electricity.

Also the generators themselves, stuck out in the 'calm' Irish Sea have a lifespan of only 10 years.

A financial time bomb, in the short term the firms installing them make lots of money.

In the long term the Government ie taxpayer will have to pay to put it right.

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Anonymous Coward

Re: destruction

Yes, it's worse than that, they're Microsoft loving immigrants and they want to make Linux illegal and there is nothing you can do because the EU says it's their human rights.

Seriously, are you for real?

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FAIL

Re: destruction

> Destruction of our countryside by expensive eye sores

And how much, exactly, of our "countryside" is offshore? (hint: there's a clue in the word "offshore")

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Re: destruction

Especially when all the electricity you ever need comes from the wall plug!

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Stop

Re: destruction

does the word OFFSHORE mean inland to you then!!!!!!!!!!!

Either way when FRAKING get's underway you will class that as worse than Env. vandalism

Swathes of Imigrants LMFAO the UK is made of nothing but immigrants you fool

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Anonymous Coward

Re: destruction

And everyone is genetically derived from some woman in central Africa. So everyone in the world is an immigrant.. Wonderful bit of meaningless sophistry - let us not use the offensive word immigrant at all lest we offend the PC.

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Re: destruction

The article refers to off-shore wind farms.

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Devil's advocate and all that

While offshore wind farms do not have huge on-land impact, there is still some:

* Wave/current patterns are changed meaning that there is likely to be changes to coastal erosion.

* Onshore infrastructure (leccy lines etc).

* Support/service craft (though those operate mostly from existing prots).

There certainly will be some change but likely far less than putting up a thermal plant.

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Anonymous Coward

We don't want any real competition say gas fueled electricity sector lobby?

The Economics of Offshore Wind Energy

1st Part of Offshore Wind Power Line Moves Ahead

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Re: We don't want any real competition say gas fueled electricity sector lobby?

Well that's handy.

With actual running times of <30% of all the hours in a year (and the need for backup generation if that does not work I guarantee they will have none.

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So its PFI thats the problem ... again

or rather Still.

I live on land and, try as I can I cannot get the components of a wind generator and its installation to come to anywhere near to 20% of the price the installers want to charge. Unless they are manufactured by hand at a Rolls Royce factory,

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Stop

Let the madness begin!!!

Let the investors invest their own money. If it makes a profit let them keep it, if it costs them more let them pay it or let them lose money. This should absolutely not be yet another burden to the British people. I fear yet again this is a scheme where those with too much money who are looking to make a quick profit will be bailed out by those that are already struggling pretty much to breaking point.

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Stop

Re: Let the madness begin!!!

It's another instance of some naïve bright spark thinking up a cunning plan to get private investors to finance infrastructure, without having the wit to realise that the more complex you make the scheme, the easier it will be for the not-so-naïve investors to find loopholes. This sort of scheme wil only ever attract subsidy farmers.

Ofgem & friends need some lessons in the KISS principle. Let a private company finance and build it, and lease it to the energy suppliers. If someone else builds a cheaper one, they'll get the business. Simple market forces. If they really need these bizarre schemes to convince investors that it's worth sinking their money into such projects, that should be a pretty clear indication that the projects aren't viable in the first place.

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Unhappy

Re: Let the madness begin!!!@Phil O'Sophical

"It's another instance of some naïve bright spark thinking up a cunning plan to get private investors to finance infrastructure, without having the wit to realise that the more complex you make the scheme, the easier it will be for the not-so-naïve investors to find loopholes. This sort of scheme wil only ever attract subsidy farmers."

Not quite. The article isn't absolutely clear, but this isn't PFI, because the government never intended to own the asset, directly or indirectly (other than for their dead flesh, control freak approach to the electricity industry as a whole).

The origins of this mess are that OFGEM (plus DECC & govt) decided in their wisdom that when building offshore wind, the land connection was an expense that could usefully be shared, and in the civil servant's mind this scheme was to reduce the overall cost, and encourage sharing of the land connections by wind farm constructors. To ensure that there was no dog in the manger attitudes, the wind farm operators are specifcially NOT allowed to build and own their own grid connection to shore. So OFGEM and DECC came up with the bizarre concept of offshore transmission system operators, complete with their own micro-regulatory environment, and as a result it has sucked in scumbucket City investment firms who know a laughably profitable deal when they see one. Your suggestion of "let a private company build and lease it to the wind farm operator" is essentially how the scheme now operates, and that's exactly what doesn't work, because there's neither effective competition, nor the wind farm operator's interest in seeing the job done in house at the lowest cost.

OFGEM could have made it work better in one of two simple ways: One, make National Grid responsible for all the offshore transmission connections, as they are on land. Or two, make the wind farm builders pay for, construct and own the transmission link as far as the shore.

But then again, when did either DECC or OFGEM do anything well, or simply? You're right that these schemes aren't viable, full stop. The only way wind farms can operate is a whole range of subsidies, both direct financial ones, tax ones, "carbon" ones, and in particular "must run" status in the merit order.

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Re: Let the madness begin!!!

FWIW, while I agree with the sentiment, this is not a get-rich-quick scheme. Infrastructure has infamously long payback times which is why it is traditionally built and paid for by the state with all the attendant risks and problems that brings with it (Berlin's airport is the current poster child cockup). So, to encourage investment in long term projects governments have hit upon guaranteeing rates of return. There is likely to be more of this for two reasons: the state can't afford to pay for new projects directly; fiscal repression and money printing have driven down returns on government bonds so much that investors, particularly insurance and pension companies, are looking for alternative long-term investments with similarly guaranteed yields. Handled properly such schemes can work out quite well: pension funds are keener on stable cashflow in the future than unrealistic yields; the surcharge of involving the private sector can be offset against the cost of funding to the taxpayer.

That's the theory. Financing energy, especially renewables, in the UK remains extremely badly thought out which is deterring the necessary investment and likely to lead to ever more hair-brained schemes to get the private sector involved the prospect of a real shortfall of generating capacity gets closer.

Here in Germany we've got similar pressures. Leccy is up to € 0.25 / kWh which is quite a bit more than the UK, I believe. The price is increasingly driven by the surcharge for funding the ever-expanding renewables - this is politically driven but also popular, unfortunately exacerbated by exemptions awarded to industry. The power companies have also successfully lobbied for the costs of connecting the offshore parks to the grid to be underwritten by the state. This, only a couple of years after signing contracts to do same without guarantees. This is somewhat understandable as some of the costs are unknown unknowns - it's never been done before. Still, it is never good for governments to guarantee the absolute profits on such endeavours.

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Unhappy

Re: Let the madness begin!!!

"If it makes a profit let them keep it, if it costs them more let them pay it or let them lose money. "

An admirable sentiment.

"This should absolutely not be yet another burden to the British people. "

Read the article.

That is exactly what this.

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Unhappy

Re: Let the madness begin!!!

"FWIW, while I agree with the sentiment, this is not a get-rich-quick scheme. "

A "10-15%" return. (I think you'll find typicall ROI's on infrastructure schemes are <5%)

Does not matter how much electricity is actually transmitted.

Heads I win, tails you loose payments from customers.

I think you'll find this is a get rich quick that runs twenty years.

So it's a get-rich-quick-and-keep-on-getting-richer scheme.

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Who knew?

It has been an openly kept secret for years that the majority of prices rises in electricity are being driven by the political process rather than the economics of generation. The Big Six are regularly pilloried in the press yet they can only dream of making 10% guaranteed return on investment. Large Combustion Plant Directive, Industrial Emmissions Directive, Climate Change acts etc are all significantly increasing the cost of electricity by ministerial diktat. Now the emmissions cleaning ones do at least have a clear cause and effect reducing NOx and SOx is deomstrably good for the environment. But the CO2 stuff is increasing prices with no prospect of ever making a difference and the chosen routes to the target are the most expensive and unreliable available. Minister made madness.

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Anonymous Coward

Re: Who knew?

"Minister made madness"

It's OK. We have the finest ministers money can buy.

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Devil

Re: Who knew?

Minister made madness.

No. Dismal, dim, ineffectual, cowardly, dishonest, and traitorous our ministers may be, but they didn't make this policy. The policy was originated by DECC under the last government, and has continued under the present government, as has the shambolic mess of energy policy at large.

Some fools think we live in a democracy. But we don't. Many think we live in a plutocracy where a ruling elite run the game purely for their own benefit. But we don't. Huge swathes of financial, energy, transport, and legal infrastructure are ruled unchallenged by the unaccounable numpties of the civil service.

You live in a numptocracy, and there is no escape.

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Anonymous Coward

Re: Who knew?

" The policy was originated by DECC under the last government"

Forget policy and Labour. It's the EU again (as per UNFCCC) and their myopic 2020 renewable energy directives. Just more of the usual dumb-fuckwittery from our EU overlords that we have now come to expect.

Read some bullshit here

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Yup, and in other news, water is wet

The cost of a single EPR nuclear plant being built in Finland right now, the same type that they want to build at Hinkley Point, originally was predicted to cost €3.3bn. Now, they estimate it may be €8.5bn. That works out at a cost of around €5m per MW.

2 off shore farms in Denmark, at Horns Rev and Nysted work out at €1.68m per MW, with all costs included.

And the construction costs there don't include the clean-up afterwards. Clean-up of turbines? Demolish over a few weeks and recycle. Clean-up of nuclear plants? Decades of work, storing of waste fuel etc...

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Re: Yup, and in other news, water is wet

Hmm... do people object to my numbers? Or are facts too hard to stomach?

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Re: Yup, and in other news, water is wet

Are your cost figures per rated Mw or per delivered Mw?

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Re: Yup, and in other news, water is wet

But how much does the OTHER power station cost? You know the one that has to sit there idle whilst the wind blows but needs to be ready to turn on for the times when the wind isn't blowing.

http://www.jmt.org/news.asp?s=2&nid=JMT-N10561

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FAIL

Re: Yup, and in other news, water is wet

Sadly the actual cost of the Thames array came in at a similar €5m per MW. For a power source that

- has a 14 year lifespan rather than 40-60

- runs at a capacity factor of 37% as a against nuclear >85%

- has no decommissioning costs included

- will require further expenses to be added in terms of backup fossil fuel power when the wind doesn't blow

- will require additional cables capable of handling the peak load that will in general be underutilised MASSIVELY at other times

- will require a smart grid to eventually attempt to iron out the massive fluctuations that will be applied to the grid.

- operates at a power density of at best 2W/sq meter of sea or land area as against 2,000W sq m for nuclear installations.

- probably makes little or no difference to the carbon footprint because of the extra inefficiencies it imposes on the fossil generation that provides the dispatch that wind cannot.

- and which carbon reduction is utterly insignificant on a global scale.

- assuming you actually think an excess of atmospheric CO2 has anything to do with anything

- and even if it did the cost of stopping it is less than the cost of adapting to it.

- and the Indians and Chinese are going to take any notice whatsoever.

I really cannot understand anyone in an industry that invented the terms FUD and Vapourware to describe sharp business practices being taken in by this massive fraud.

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FAIL

Re: Yup, and in other news, water is wet

"2 off shore farms in Denmark, at Horns Rev and Nysted work out at €1.68m per MW, with all costs"

Woohoo, bargain for tree huggers. The rest of us might balk at paying €1.68m/MW (£1.4m) when a state of the art gas CCGT works out at £0.27m per MW. And that figure you've quoted isn't with all costs included. That's for power generated about 30% of the time, and on the coldest 100 days of the year the load factor will typically be even lower at around 6%.

So your "all costs included" needs some form of continuously available standby that you haven't factored in, unless you're proposing "African dictatorship" reliability from the power grid. DECC have followed your thinking for the past ten years, but are now on the cusp of annoucing "electricity market reforms" that will further increase electricity costs, because their idiot-inspired wind farms are wrecking the long established system marginal pricing model. So now we'll need to subsidise CCGT and coal plants in order that they remain on line, in addition to the ludicrous subsidies being paid for crappy, ineffectual renewables.

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Re: Yup, and in other news, water is wet

The main problem with wind power is that it's only strong enough about a third of the time. So not only is the cost of the power actually delivered three times greater than the cost per unit nameplate capacity that it promises but provision also has to be made for alternatives when the wind isn't blowing.

Pumped storage is limited and already maximally used in coping with daily variations in consumption. Other storage methods would be very expensive. Large distribution grids only partially solve the problem, aren't yet build and would be hugely expensive.

To generate the necessary backup power that is required only some of the time is obviously going to cost more then steady production. It's also likely to create more carbon dioxide.

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Boffin

Re: Yup, and in other news, water is wet

What is their operating cycle? How much of the year are they generating?

What's the backup? When they are not generating, what takes over?

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Coat

Re: Yup, and in other news, water is wet

The fifth nuclear plant in Finland the ERP 1600 MV plant is indeed years late but a large part of that problem is something Areva will have to suffer in their books, not the taxpayers.

The thing that always surprises me is how often people forget that we are not able to store electricity in any clever way. Wind power can add a bit and you can also run a diesel plant on farting elephants the problem being that they are not allowed any longer pauses.

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Re: Yup, and in other news, @Lars

"The fifth nuclear plant in Finland the ERP 1600 MV plant is indeed years late but a large part of that problem is something Areva will have to suffer in their books, not the taxpayers."

But somebody still pays. Nobody would have started Olkiuloto if they had known the out-turn price would be around €9bn, and so the extra circa €5.5bn is wasted investment for the European economy at large. Indeed, unproductive capital and current spending are a principal causes of Europe's economic woes, so this is merely a continuation of form for Europe.

The French government want to fold Areva into EdF (perhaps to avoid Areva going bust), but say they allowed Areva to go to the wall, what's the benefit? The cash has already been spent, and the economic loss incurred. Again, that's the wider European problem, that expecting somebody else to be "liable" doesn't fix the problem of excess debt and unproductive spending.

The only really beneficial thing you can do in these situations is to learn from them (both Olkuloto, and European experience on subsidising renewables etc), and that's precisely what DECC are not doing. There's no way on earth we should be looking to build one or two off reactors to unproven designs, and equally we shouldn't be wasting time and money on renewables unless there's a way to store the power cheaply and efficiently.

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Anonymous Coward

Crazy scheme... surely national grid should be,... national, i.e. ran by the nation, the government, then we can get the best deal possible.. offering incentives for private companies is always a bad idea... look at the mess of onshore wind farm subsides... and the paying for wind farms when their idle!!

offshore is the right place to put the wind, but it has to be commercially viable, not incentivised....

yes grants to develop the technology, but no to subsidies for running...

Use the stick a bit more, rather than just a carrot...

The solutions are fairly obvious to our power issues, wind should be offshore and place tide power harnessing beneath the surface, add to that solar roof tiles on all new builds (and some kind of subsidy for those of us who want it, but don't like the idea of recouping costs over the long run)... then the rest to be supplied by new nuclear plants... and use Fracking to provide gas for our cookers

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Anonymous Coward

@AC 09:07

"Crazy scheme... surely national grid should be,... national, i.e. ran by the nation, the government, then we can get the best deal possible.. "

Err, are you stupid or something? The current mess is entirely because the useless, fuckwitted cretins of DECC and Westminster set the rules. They (and their lackeys at OFGEM) set the market rules. They decide what is allowed to be built in terms of power stations. They sign up to ludicrous EU rules that will force closure of a large chunk of UK therms generating plant by 2015. They come up with the comic subsidy arrangements that have foced power prices up by encouraging unproductive investment in solar and wind. They signed up to EU carbon restrictions and charges that force up the price of thermal plant output.

And you want to give these arseholes more control? In principle, what you're talking about is moving customer billing and service to the government (an area where their expertise is legendary), along with financing and construction of plant and networks (another area of world class idiocy for the British government).

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Anonymous Coward

Re: @AC 09:07

Isn't the underlying problem that the last Labour admin (probably still in Blair era) signed up for the "20% renewables by 2020" commitment thinking that it would be easy to reach because they were only thinking about electricity and getting 20% of electricity generation by renewals seemed feasible ... but when it dawned on them that they'd signed up to use renewals for 20% of all energy usage and that a large chunk of energy usage (e.g. home gas central heating) was not able to be switched to renewables then they'd need to switch a huge proportion of electricity generation to renewables.

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Anonymous Coward

Re: @AC 09:07

Strange that their actions seem to work in favour of wealthy investors and large corporations at the expense of the taxpayer. I think that identifies the real motive behind the legislation.

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WTF?

Re: @AC 09:07

"but when it dawned on them that they'd signed up to use renewals for 20% of all energy usage and that a large chunk of energy usage (e.g. home gas central heating) was not able to be switched to renewables then they'd need to switch a huge proportion of electricity generation to renewables."

Not true. Tony Blairs office was asked about this and they stated that Blair wanted it to include all energy.

He wanted a "legacy" people wanted and (I'd suggest) g**k Gordon Brown big time, because he was leaving anyway.

Looks like he got his wish in both cases. Never underestimate the spite of outgoing politicians.

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Anonymous Coward

Re: @AC 09:07

> stated that Blair wanted it to include all energy.

What Bliar said he wanted, and what Bliar wanted, are two totally different things. It is amazing that that man isn't in jail somewhere yet.

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FAIL

So I was thinking of getting some money together to buy a licence... who wants easy money? I have an investment for you....

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PFI - Epic fail

All PFI is, is a way to take money from the poor (via taxation) and hand it to the rich. It should no longer form any part of any state enterprise. And all these "private partners being paid by results" need to go to; it's the same kind of scam.

As for wind power...utterly useless (expect in a very few cases) and it will remain so until we have a way of storing the power for when the wind does not blow. Liquefying air, making fuel from H20 and CO2, pumping water uphill or whatever; unless we can store it, there's no point in having it.

Unless we want to be like Germany and have to import dirty coal power.

And, of course, wind power isn't very green; just ask the bats.

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Boffin

Re: PFI - Epic fail

You cant ask the bats

They are dead.

Or is contact with the lost souls of small dead mammals another 'green initiative'?

Frankly where green vapourware is concerned, nothing would surprise me in the aroma therapy crystal gazing homeopathic organic natural ME generation..

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Re: PFI - Epic fail

"You cant ask the bats They are dead."

That was my point...

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Re: PFI - Epic fail

We import nuclear power and export wind power. 2012 the installed and operational wind turbines in germany produced more power than our ancient and unreliable nuclear reactors.

Two of our customers are nuclear powerplants.

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FAIL

Re: PFI - Epic fail

"We import nuclear power and export wind power."

Yes. So German consumers pay to subsidies "must run" wind power, then sold internationally at low wholesale prices to neighbouring countries. None of my business if Germans wish to subsidise French, Swiss and Austrian electricity users. And Poland have just installed limiters on the power connectors with Germany, because German wind exports have been destabilising their grid. Hardly looking like a success to me (and I work for a German power company).

"2012 the installed and operational wind turbines in germany produced more power than our ancient and unreliable nuclear reactors."

Not much use at peak load times. Take RWE's figures for 8 February 2012. German demand was running at a touch around 90GW. Due to generous subsidies there's 150GW of capacity... unfortunately on still winter days the circa 50GW of wind and solar are outputting virtually nothing. One or two thermal plants were offline, but were offset by the 5GW of balancing capacity of the TSOs, and net export balance was a lowly 2GW. Reserve capacity was down to 2GW (say a single large CCGT station).

That's not a success, that was complete bloody madness, risking systemic failure of the power supply for huge areas of the largest economy in Europe, and potentially cascading into other countries. And all because some German knobs are obsessed with renewables. if that's how you lot wish to run a power grid, feel free, it's unlikely to impact me. But I can't see that you'll be any more popular in the rest of Europe if you plunge your neighbours into darkness because of incompetent planning.

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Anonymous Coward

PFI story

Not really an energy story. This same text could be applied to anything from rail to housing stock and flood control projects. PFI is a disaster for taxpayers across the board. Speaking of boards, when the Treasury staff and/or ministers who push these deals through leave, I wonder where they'll look for new jobs? Could it be as non-execs with the companies creaming off all this cash? I think it may be so...

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Anonymous Coward

We need reliable and ideally low carbon generation - solar and wind are unreliable and expensive. Nuclear is our current best bet.

Rather than the government offering such generous terms to often foreign companies / investors perhaps they should use some of the relatively cheap borrowing we have access to to build them. Effectively everyone in the UK pays and everyone benefits from reliable, cleaner and hopefully cheaper generation.

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Anonymous Coward

Tory scum are useless!

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Treasury defense "did not want to introduce any limitations on investors"

Now is this a defense from real career civil servants in the Treasury.

Or "consultants" hired from the sort of companies who will be advising the companies on how to play the system?

That's what happened with PFI was applied to hospitals and schools. The didn't think any claw back if the deal was re-financed (SOP for these companies) was "fair" either.

But note this is not a PFI deal. It's equally f**ked up but it's not a PFI.

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I think wind farms are great inland OR offshore, yes there is an initial cost layout for transmission but that is not an ongoing issue but finite.

To all those who want to see less wind farms I guess you love the idea of FRAKING for shale gas!!!

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