Wednesday, September 2, 2009

Fighting for wind against markets

The workers occupation of the Vesta wind turbine plant on the Isle of White, threatened with closure with the potential loss of over 600 jobs there and in and an ancillary unit in Southampton, attracted massive support from green groups and trade unions- and, buttressed by the governments new Renewable Energy Strategy, there were calls for the plant to be nationalised. It was seen as a key struggle for green future- uniting ‘reds’ and ‘greens’.

As Green MEP Caroline Lucas put it in the Guardian (24/7): ‘In microcosm, the situation in the Isle of Wight demonstrates the extent to which ministers have ignored calls to promote the renewables industry- squandering opportunity after opportunity to create or protect jobs in fledgling green industries, as well as to meet the UK's greenhouse gas reduction targets’. But not everyone was so keen. The Independent pointed out that the plant made blades for the US market ‘which are unsuitable for UK wind farms’, adding that ‘Vestas is considering setting up a research and development facility in the area to help develop and test products suitable for the UK offshore market. If this is the case, it is easy to see why rash moves by the Government now could ultimately prove counterproductive’.

And the European Wind Energy Association told ‘The solution is not nationalisation or bail-outs. The wind energy sector itself is much better at producing wind turbines than the government. It's a question of roles. The sector's role is to manufacture wind turbines and the government's role is to create a framework that attracts investment and regulation to ensure targets are met. I don't think we should mix up these roles.’

Vestas, the world's biggest wind energy firm, made pre-tax profits of €803 m last year, up from €579 m in 2007 and saw a quarterly sales rise of 59%, up to €1.1 billion, with its UK division also producing rising multi-million pound profits each year. But, it told that: ‘Due to the credit crunch, soft currency and lack of political action in the UK, we have had to cut down capacity.... Downing Street is doing a lot to support green jobs, but in the countryside there is a lot of opposition. We are being stalled locally. Hardly anything is happening onshore. The offshore market cannot justify us converting the facility to make products for the UK. The market is not big enough. We need onshore too.’

The British Wind Energy Association also backed the company, telling euobserver that ‘the market and the sector's becoming very, very competitive. A number of new entrants are coming from India and China, and it could be that the company needs to cut its costs, producing more cheaply and efficiently. This is to be expected - they have a clear obligation to shareholders to maximise profits.’ But talking later on to NewEnergy Focus, the BWEA put a slightly different spin on it: ‘There is now a direct correlation between nimbyism and the curtailment of the economic benefits of wind power. A positive factor of this unfortunate crisis is that the public are now aware of the fact that the opposition to wind farms is affecting the economic opportunities available to this country.’

That was certainly the line being adopted by the company and the government- it’s not our fault, it’s the NIMBY’s , although the company, like the BWEA, also suggested that its was the planning system that needed improvement: ‘The local planning process for the construction of new onshore wind power plants in the UK remains an obstacle to the development of a more favourable market for onshore wind power.’ ( A Guardian editorial went further and suggested that what was really the problem was that, for a range of reasons, Vestas did not believe that the UK governments plans for wind and would really materialise on the scale hoped for.

The announcement of a grant of £6m for Vestas for R&D work on offshore wind technology, part of a new £1bn fund for offshore wind to be organised over the next 3 years by European Investment Bank (EIB) and 3 UK Banks, did not seem to alter the situation much - it was on-land wind that was the issue for the existing plant. Sadly the sit-in workers were evicted –and then 425 workers were sacked, but with 40 being offered jobs in the new R&D centre. Vestas said ‘this commercial decision was absolutely necessary to secure Vestas' competitiveness and create a regional balance between production and the demand for wind turbines.’

What are the lessons from all this? Well, BWEA Chair, Adam Bruce, told, ‘the situation at Vestas is a tragedy for the employees, their families and the wider island community, but it does not represent a failure of wind energy, nor the market for wind energy in the UK. If anything, it shows that the
supply market for onshore turbines is very competitive’.

We might draw different conclusions about market failure and the wonders of market competition. And about how to respond. Bob Crow, General Secretary of the RMT union commented that the Vestas workers had ‘done more for the future of green energy and green jobs in the UK in 2 weeks than the government has done in 12 years’. Perhaps a bit overstated, but highlighting the need for reds and greens to work together.

For euobservers full analysis see