Too high a price?

I read the article on the Beatrice Wind Farm (Scotsman, 30 July) with interest. The £2.5 billion investment is truly significant. However, companies do not invest these sums without a similar return.

Beatrice Offshore Windfarm Ltd was awarded a Contract for Difference (CFD) at an Allocation Strike Price of £140/MW by the Low Carbon Company, owned by the UK Government. This price is inflation-proof and currently stands at £158.73/MW for the first 15 years of operation.

Beatrice’s output is 588MW. The return on the investment from the UK Government is 588 MWx15yearsx 365 days x 24 hours x £158.73 x 0.37 capacity factor, giving £4.58bn at today’s inflation rate. SSE will receive £1.83bn (40 per cent), Copenhagen Infrastructure Partners, a Danish Pension Fund, will receive £1.6bn (35 per cent) and Red Rock Power, a wholly-owned subsidiary of the State Development & Investment Corporation of China, will receive £1.14bn (25 per cent). The £34 million to the local community is 0.74 per cent of the return and the £28m to the Coastal Community Fund is 0.61 per cent, although all donations to the funds are welcome.

These subsidies come from the UK Government, but no government gives away money. The costs are charged to the UK households, that pay electricity bills directly through the charge per unit (kwh) and indirectly, through hidden charges in the bills. The outcome is that UK and Scottish families that pay electricity bills, even if they cannot afford them, are paying £2.75bn to a Dutch pension fund and a chinese investment corporation for the next 15 years.

GEO P WILSON Viewforth, Dunbar