Energy Musings - July 31, 2025
Yesterday brought two interesting developments involving renewable energy. US wind and solar power is under examination for its approval process. In Scotland, we learn how cash can buy support.
Items of Interest For Wind Energy
Two items came to our attention yesterday that impact the wind energy industries in the U.K. and the U.S.
The Profitability of Wind Energy Subsidies
A long-standing effort to build a wind farm on a remote island off the coast of Scotland has suddenly overcome the islanders’ objections, underscoring how profitable wind energy subsidies are. Bloomberg published a Business Week article titled, “Everyone Loves to Hate Wind Power. Scotland Found a Way to Make It Pay Off.” The title was appropriate.
The Isle of Lewis, northwest of Scotland, is home to 20,000 people, but has a weak economy with few opportunities for earning incomes other than by farming or fishing. The isle experiences strong wind gusts that enable wind turbines to generate twice the average power of U.K. wind turbines.
In discussing the challenging lives of Lewis residents, the article noted that President Donald Trump’s mother, Mary Anne MacLeod, emigrated from Lewis to New York City in 1930. The President expounded on his anti-wind stance, particularly regarding offshore wind farms, on his arrival in Scotland and during a meeting with Ursula von der Leyen, the President of the European Commission, at Trump’s new Scottish golf course last weekend, which coincided with tariff negotiations.
The Isle of Lewis is to be home to new wind farms.
The Stornoway Wind Farm, the focus of the article, was proposed in 2001. It has since gone through multiple ownerships. A joint venture of ESB, an Irish utility company, and EDF Renewables, a subsidiary of the French utility, currently owns it. The project is now moving forward because of the financial arrangements the developers offered to the residents. The financial arrangement capitalized on the experiments with small wind projects undertaken by local Lewis communities. Their financial successes proved to be the model followed by the Stornoway Wind Farm.
In 2013, the village of Tolsta, using a grant from the U.K.’s national lottery, erected a 150-foot-tall wind turbine. It sells about £1 ($1.3) million of power to the grid. That money subsidizes a local grocery, college scholarships, driving lessons for local teens, and, when power prices are especially high, cash payments to villagers. The Tolsta success was followed in 2015 by three villages funding a 3-turbine wind farm, which earns £1.1 million ($1.5 million) and funds a small shop and café and maintenance of the ruins of a 15th-century church.
These successes prompted Stornoway Wind Farm and another wind farm project owned by Eurowind Energy A/S to offer lucrative financial incentives to the locals, more lucrative than other developers were willing to offer. The arrangements for the Stornoway Trust that owns the property where the wind farm is located are annual lease payments of almost £2.7 ($3.6) million, a further 20% equity stake, which is estimated to earn Lewis another £10 ($13.2) million or more annually, with no financial risks or maintenance costs. The Eurowind project offered similar terms.
The next challenge for the wind projects is constructing a new cable to ship the power from Lewis to Scotland, as the existing connection is already overwhelmed. There are many days when the island’s few wind turbines are spinning in the wind because of the cable’s capacity limitation.
A challenge for Scotland is that wind power is overwhelming the national grid. In 2024, the U.K. organization responsible for balancing Britain’s electrical supply paid wind operators almost £400 ($528) million in “constraint payments” to idle their turbines. Scottish wind farms received 98% of that money, which was paid for by British electricity consumers.
In May, the U.K. government proposed that renewable energy developers provide funding for local community benefits, such as those in the contracts on the Isle of Lewis. After nearly a quarter-century, the folks on Lewis overcame their Not In My Backyard (NIMBY) opposition to wind energy because they were showered with cash. The fact that it took years for government officials and wind developers to understand that the easiest way to overcome NIMBY was to cut the locals in on the flow of subsidies. This lesson also demonstrates how lucrative the substantial U.K. government subsidies for wind power are. They are so lucrative that developers can afford to give away a portion to local communities while still earning healthy returns on their wind farm investments.
Major Trump Administration Move Against Offshore Wind
Yesterday, Secretary of the Interior Doug Burgum issued Order (SO) 3437 - Ending Preferential Treatment for Unreliable, Foreign Controlled Energy Sources in Department Decision-Making. The order was to comply with “President Donald J. Trump’s July 7, 2025, Executive Order (EO) 14315, titled ‘Ending Market Distorting Subsidies for Unreliable, Foreign-Controlled Energy Sources,’ which directs the Department of the Interior (Department) to identify the existence of any preferential treatment toward wind and solar facilities, in comparison to dispatchable energy sources, in any Department regulations, guidance, policies, or practices, and to make the necessary revisions, as appropriate and consistent with applicable law, to eliminate such preferences.”
One of the first actions taken under the order was the Bureau of Ocean Energy Management (BOEM) announcing it is rescinding all designated Wind Energy Areas (WEAs) on the U.S. Outer Continental Shelf (OCS). These are the massive acreage spreads up and down the East Coast of the United States, where leases were issued for constructing offshore wind farms.
Each Assistant Secretary, within 30 days of the issuance of the order, is required to perform numerous investigations and analyses and report to the Secretary their findings. The issues such as land use and site authorizations, environmental and wildlife permits and analyses, processes related to Tribal and Native lands, and commercial and financial authorizations in support of wind and solar projects are to be investigated and reported on.
Importantly, two specific offshore wind issues, currently subject to administrative and legal action, are to be investigated. The first issue deals with completing reports on the environmental impacts from onshore and offshore wind, the economic costs of intermittent electricity generation on ratepayers, the effect of taxpayer subsidies in artificially propping up the wind industry, and the impacts the development of offshore wind projects with COP (Construction and Operational Plan) approval from the Interior Department (BOEM) may have on military readiness.
This mandate specifically relates to an administrative petition submitted to stop the Vineyard Wind construction off the coast of Massachusetts by a group of fishing organizations led by Seafreeze Shoreside, Inc. They have filed a petition with the Secretary of the Interior and BOEM.
“PETITION TO RECONSIDER VINEYARD WIND 1’s CONSTRUCTION AND OPERATIONS PLAN (LEASE NO. OCS-A 0501), AS AMENDED JANUARY 17, 2025, AND TO ISSUE AN ORDER SUSPENDING FURTHER CONSTRUCTION AND ENERGY GENERATION ACTIVITIES AT THE PROJECT SITE PENDING RECONSIDERATION”
The other issue in Burgum’s order requires the department’s Solicitor to conduct a review in conjunction with the Department of Justice and any other relevant agencies of any pending litigation challenging the approval of wind or solar projects. The review is to consider whether the decisions were based on legally or factually supported findings and conclusions. The Solicitor is also required to assess whether the approvals are consistent with the most recent judicial interpretation of the law or the Interior Department’s interpretation of the best reading of the applicable law. The reviews are to determine if the decisions are to be remanded for reconsideration. This mandate will require a review of the approval process that is subject to a lawsuit to halt the construction of the Empire Wind project off New York Harbor.
When we reported on the Empire Wind lawsuit in early July, we noted that this would be the start of an interesting period for wind. The reports are due within 30 to 45 days from now, making September an interesting period. We can’t wait for the outcomes of the studies.