Wind power boosted by £1bn in new loans

The government will today demonstrate its willingness to exert influence over Royal Bank of Scotland and Lloyds Banking Group by announcing £1bn of lending to wind farm developers whose schemes have been becalmed by a lack of cash.

The initiative comes as Greenpeace unveils new figures showing that local councils run by the Conservative party block more than three times as many wind farms as they approve. Labour-controlled councils meanwhile approved marginally more projects than they turned down between December 2005 and November 2008, according to the campaign group.

Both issues are important because Vestas, the UK's only major wind turbine maker, is threatening to close its manufacturing plant on the Isle of Wight this week blaming some of its woes on "faceless nimbies" and a lack of a vibrant domestic market.

Ed Miliband, the energy and climate change secretary, will argue that the £1bn of loans organised through the partly state-owned banks and the European Investment Bank (EIB) will kick-start one gigawatt of onshore wind schemes delayed by the credit crunch – enough to power two million homes. The government does not want the loans to be seen as a specific attempt to save the Vestas plant, which is at the centre of a sit-in by workers.

"Earlier this month we laid out a transition plan to a low-carbon economy that included a massive expansion of green wind energy," Miliband will say. " The resources we are announcing back up our plans with clear actions to ensure we deliver. The money for the development of offshore wind manufacturing will help us generate green jobs on top of our success as the leading country in the world for the generation of offshore wind.

"Alongside these proposals, we are reforming planning laws, finding new ways of working with local communities and are determined to persuade people that we need a significant increase in onshore wind as part of the UK's future energy mix."

The £1bn cash arranged by the government is part of the additional £4bn of EIB lending to support UK energy projects announced in the spring budget. The government has been urged by environmentalists and think tanks to use the state equity stakes in banks – gained when they had to be bailed out last autumn – to push them towards green projects.

But the loans are unlikely to change the decision of Vestas to close its manufacturing plant at Newport on the Isle of Wight. The Danish group exports the turbines from there to the US, but the blades are unsuitable for the UK market and America will in future be served from a new production line in Colorado.

Vestas was considering investing in a new type of blade for the UK market but said the credit crunch, soft pound and endless delays in planning projects had made this uncommercial.

Greenpeace claimed last night that its study of publicly available information provided to the Department of Energy and Climate Change (DECC) showed that Tory councils approved 44.7MW of onshore wind schemes but blocked 158.2MW. Labour-controlled councils approved 68.3MW and rejected 62.6MW.

"One of the reasons Britain's green industrial revolution is yet to take off is the lack of domestic demand for wind turbines, and a key reason for that has been the attitude of many Conservative councils," said John Sauven, Greenpeace's executive director. "They need to be offered incentives to stop blocking wind developments, while David Cameron could make a difference straight away by making a crystal-clear commitment that a Tory Britain would meet the target to generate 20 per cent of our energy from renewables by 2020."

Vestas has insisted it will take no decision on the future of Newport and another facility at Southampton until the end of this month, when a formal consultation with its 600 staff ends. But the government seems resigned to the closure.

A research and development base at Newport will keep going and Vestas is expected to be one of the beneficiaries when a £10m R&D fund is distributed by the DECC, perhaps as early as this week. A second £10m fund will be launched by Miliband today and Vestas will also be eligible for funding from that.

This article first appeared on The Guardian

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