Planning problems leave UK suffering from 'trapped wind'

Wind turbines - not enough are being built

As the Financial Times pointed out yesterday, the UK has one of the most inefficient systems for subsidising renewable energy in the whole of Europe. Here we use a mechanism called - snappily – the renewables obligation. Like a compulsory visit to the mother-in-law on her birthday, the renewables obligation requires every power company in the land to produce a certain proportion of their energy from renewable sources like wind, wave and tidal power. Those that produce more than their allocated amount can sell credits to those that have come up short. So far, so good.

Because the green credits can be bought and sold, the RO is a free market economists dream: it's all about trading, with prices for green credits set by the market. The city traders must have rubbed their hands together when they heard about it, thinking more about their commissions than carbon free power. In theory the system is 'guaranteed' to deliver the 'lowest cost solutions' – because they make the most money. It stands to reason, they say, because that’s what markets do.

Except that in practice the system has proved to be so complex and the price of credits so uncertain that few people have the confidence to invest. Banks charge over the odds for loans to build renewables in Britain and the performance of the system has been ridiculed as being amongst the least efficient and most expensive renewable energy policies in the whole of Europe. Only Italy has managed to make their system more expensive than Britain.

And unfortunately there is another major problem. Because of the difficulty of getting wind farms through the UK's archaic planning system (and we’re not only talking nimbys here – in a fit of very unjoined-up government even our distinguished MoD is resistant to new wind projects) there are nowhere near enough turbines being built - despite the profits being made. Too many companies are having to buy the available credits from just a handful of renewable energy providers, because it's so hard to get new farms built – and that makes the price even higher.

To put it another way, in environmental circles the amount of trapped wind in the UK is causing an almighty stink. Consider the figures. Currently the UK generates around 2.4 gigawatts (GW) of power from wind – enough to power 1.3 million homes, only a tenth of what Germany has achieved, but still no trifling amount. However, set against this, there are more than nine gigawatts stuck in the planning process right now. Last year, just 427 megawatts (MW) of generating capacity was built, down from 631MW in 2006. For those not studying A-level physics – a gigawatt is 1000 megawatts and a typical conventional power station is about 1 GW in capacity.

Sorry for all the numbers and letters, facts and figures, but I'm going to give you one more. The UK currently generates the lowest proportion of its energy from renewables of any major nation in Europe. Only Malta and Luxembourg lag behind the Brits. Like Bolton Wanderers after Anelka left, we're dangerously close to a humiliating relegation.

There is a solution, but we need to act fast. In Germany, a system called the feed-in-tariff has delivered a renewables sector that in 2006 produced more electricity than the entire UK nuclear fleet. And it's still growing. Under their system, the government guarantees a fixed price for renewable energy, allowing certainty of investment and incentivising small scale production. Combined with a proper reform of the planning system (so that it helps make sure we build sustainable clean energy instead of new runways and nuclear plants) it could turn the UK around. It's pretty simple stuff, but without them we aren't going to stand a chance of fulfilling our renewable energy potential.