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United Kingdom

DEBATING POOLS AND WHEELING IN A FREE MARKET

The major debate of Britain's national wind conference this year homed in on the theme of how wind will compete in a free market. Although liberalisation of the UK electricity market is less than three years away, no one in the industry can be certain how this will affect wind farm operators. Nor has the subject been studied closely to identify how the industry can best meet the challenges and maximise the opportunities it presents, agreed participants at the British Wind Energy Association (BWEA) conference in July.

Kicking off the debate, Indian wind developer Rakesh Bakshi claimed his country's practice of "wheeling" electricity for a two per cent charge holds lessons for Britain. "Power is wheeled from the generator to the consumer so that wind energy can stand on its own two feet," he said. Power can also be sold direct to third parties by paying a 15% wheeling charge. "You can learn from India," advised Bakshi.

Michael Davies from Ian Pope Associates of the UK suggested an alternative to the existing electricity legislation for trading electricity. In a project funded by the European Union's Altener programme he is to look into the feasibility of a separate renewable energy "pool" that would allow consumers to purchase renewable electricity from a mix of clean power technologies.

Present electricity trading -- both in Britain and America -- came under attack for not recognising the environmental costs or externalities of fossil fuels. Several delegates called for changes to quantify the value of wind to a supply system and quantify its environmental benefits. Transmission losses are minimal with wind plant when it is embedded in a supply network, as is usually the case. "We cannot be solely dependent on the cheapest form of energy," commented US consultant Paul Gipe. "If we leave it to the political process to put a value on wind energy we will all be waiting forever," was another cynical observation.

Many, however, favoured the simplicity of the Indian example. UK wind economics expert, David Milborrow, warned, though, that assigning a true value to wind would further complicate current legislation. "How do we alight on an accurate value for wind without getting bogged down in enormous complexity?" he asked. "Whatever we do it must be simple." India had a good system which Britain should emulate, he said.

Speaking up for Britain's beleaguered distribution companies, the Regional Electricity Suppliers (RECs), Ian Parker of East Midlands Electricity pointed out that existing legislation does provide for wheeling across electricity utility borders. "The wheeling system is there for everyone to use, but if it is going to be changed it should not be in favour of one form of generation over another," he said.

The BWEA was urged to determine a plan of action to take the issue forward. New BWEA Chairman Tim Kirby endorsed the need for action but warned of the need to be pragmatic. "One of the first things we ought to tackle is OFFER's [Office of Electricity Regulation] concept of the cost to the consumer," he said, referring to the Electricity Regulator Stephen Littlechild's interpretation of the cost of renewables as the difference between NFFO contract prices and the pool price -- thereby elevating the pool price to the status of market price. The association should make strong representations to OFFER to get this concept changed, he said.

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