Europe's green energy vision puts UK in dark

It is a dazzling vision of a clean energy future. An entire continent powered by solar panels, wind and wave turbines, geothermal and hydroelectric power stations -- and all stitched together by a European "supergrid" stretching from the sunbaked deserts of the south to the windswept North Sea, from the volcanoes of Iceland to the lakes of Finland.

It may sound like the stuff of science fiction but this is a vision that the European Union wants to make a reality. The concept is gaining ground among policymakers, including leaders such as President Sarkozy and Gordon Brown, who are concerned about Europe's carbon emissions and its steadily growing dependence on Russian gas.

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The truth is that, despite the Government's talk of a green energy revolution, Britain's renewable energy industry is in crisis.

About 40 per cent of the UK's power stations were built before 1975 and urgently need to be replaced. But the combined impact of the credit crunch, falling oil and coal prices and the weaker pound now threaten to hold up wind projects just as the UK has raised its commitment to green electricity.

"The economics a year ago were already tight but the cost of capital and the foreign exchange movement have made it much harder," says Sarwjit Sambhi, director of power generation at Centrica, one of Britain's Big Six power companies, which is trying to build a 250 megawatt (MW) wind farm off Lincolnshire, big enough to supply 170,000 homes. "We are not going to make investments below our return on capital so my goal will be to spend as little as possible until the economics improve," he said.

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Wind power, easily the most economically attractive form of renewable energy in the UK, remains hugely expensive when compared with gas and coal.

A recently approved gas-fired station in Pembroke will cost £1 billion and will be the largest in the UK, producing 2,000MW. It would cost six times as much to build a windfarm of similar capacity.

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Until Europe's governments grapple with the fine detail of these issues, the Continent's dreams of a supergrid and a future free of fossil fuels are likely to remain in the realms of science fiction.

Beyond the ignorant confusion between cost per MW and cost per MWh, there's yet more of that "wind is unserious" mindset. Wankers.

In the long run, we're all dead. John Maynard Keynes