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United Kingdom

WIND AND ITS VALUE TO THE GRID

An accepted definition of the market price of wind still proves elusive and its value to a power supply system is often overestimated, the British Wind Energy Association's 1995 conference was told. The advantages of "embedded" generation offered by wind energy should be reflected in the price paid. This is a major preoccupation of the industry which is trying to converge on a market price around £0.035/kWh, taking account of the embedded value of electricity. One aspect of this can be calculated accurately, the Triad value, according to one aspect who demonstrated the point with data from operating wind farms.

The value of wind energy proved to be a recurring theme throughout the conference. As the price is driven down, the uncertainty over how much further it has to go before it reaches the "market price" becomes less academic. However, an accepted definition of the market price still proves elusive. The advantages of "embedded" generation offered by wind energy (because wind is embedded in the supply network transmission losses are minimised) should be reflected in the price paid, as should its environmental benefits. This is a major preoccupation of the industry at the moment with the 1998 deadline for a totally free market for electricity looming in Britain.

David Lindley of National Wind Power estimated that the market price on which the industry is trying to converge is around £0.035/kWh, taking account of the embedded value of electricity. "We can say now with some justification that the average prices being bid are very close to being competitive with the real value in the local grid systems," he said.

One aspect of the value of embedded generation can be calculated accurately, maintained John Warren from National Wind Power. This is the Triad value. He drew attention to the payments made by regional electricity companies (RECs) for use of the National Grid transmission network. These are based on three periods of winter peak demand (TRIAD periods) which coincide with higher output from wind installations. "Wind farm capacity factors during periods of peak demand are typically 50% higher than average all-year capacity factors," he said. Taking the example of two NWP sites at Kirkby Moor and Bryn Titli, he demonstrated that capacity factors averaged over ten years would translate into embedded energy values of around £0.0020/kWh. "Compared with average NFFO 3 contract prices of £0.0435/kWh these TRIAD values are not insignificant and need to be acknowledged," he said. Only the RECs -- not wind farm operators -- will benefit unless TRIAD values are recognised, he warned.

Al Cavallo from the US Department of Energy pointed out that America alone assigns an estimated $150 billion per year on military expenditure to protect fuel supplies -- particularly in the Middle East. "Wind energy is much more valuable than is generally perceived because it does not have this type of expense," he said.

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