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United Kingdom

Dismay and shock at bid results, Scotland puts cap on wind

Scotland's wind energy industry is reeling from the blow dealt by industry minister George Kynoch when he revealed the meagre allocation of contracts to wind under the country's latest round of renewables support. "Stunned" , "disappointed" and "amazed" are just some of the reactions of the wind community to Scotland's second round of the Scottish Renewables Obligation -- SRO-2.

A mere seven wind contracts for 44 MW declared net capacity (DNC) were awarded despite 142 wind bids totalling 653 MW of capacity at prices from as low as £0.0274/kWh. Announcing the results of the order on March 13, Kynoch said he had limited wind's share in response to concerns about its visual impact and the need to safeguard the scenic value of the Scottish countryside. "For this reason, we have decided that wind projects, while being allocated substantial capacity within the order, should not form a disproportionately large part of it," he said. The Scottish Office awarded a total of 26 contracts for 112 MW of capacity, after receiving a total of 184 bids for 783 MW.

As well as the seven wind contracts, there were nine waste to energy projects (55 MW), nine hydro (11 MW) and one biomass (2 MW). In making the order the Scottish Office ignored advice from Electricity Regulator Stephen Littlechild who had devised two methods for fulfilling the order. The first, taking the least cost option, would have led to 11 wind projects and one waste to energy, but no hydro or biomass schemes. His second recommendation for a more balanced alternative favoured eight wind projects, six waste to energy, four hydro, but still no biomass because of its higher cost.

The kilowatt hour prices bid by the seven successful wind projects range from £0.0274 to £0.0294. Not everyone who won a contract is owning up to it, although electricity generators ScottishPower and PowerGen both admit to receiving two contracts each. According to ScottishPower's Steve Cowie, the company intends to start work on developing its sites as soon as possible.

The long awaited order was greeted with almost universal dismay from the wind industry. Adrian Lloyd from the Scottish Branch of the British Wind Energy Association (BWEA) says he is surprised and bitterly disappointed. "There is paltry provision for wind power, despite Scotland having the best wind resource in Europe. It would appear that SRO2 has been a costly but wasted opportunity.

Half consumer price

"The cost of wind energy has fallen so much that over half the bids were for prices of less than 3.5 pence per unit, which is just half the price domestic consumers pay for their electricity," he says. "At these prices, our industry could supply over 5% of Scotland's electricity in a sustainable yet very economic way."

Lloyd claims wind's poor share of the order is due to Scotland's lack of a true free market for electricity. He points out that in England and Wales, renewable energy is judged against pool price for electricity. "As there is no market in Scotland, we are judged against the marginal cost of fuel at Longannet," says Lloyd referring to the coal fired power station there. He adds this is now set at £0.0132, but will fall to £0.0110 when it begins burning Australian coal instead of Scottish coal.

The BWEA Scottish Branch is also disappointed by the continued lack of SRO support for small wind energy schemes. It would like to see a small wind band -- as in England and Wales -- to give a chance to schemes put forward by local groups including farmers and crofters. A major worry voiced by several wind commentators is the SRO's effect on the emerging Scottish wind industry. "There is a general air of despair," says Robert Forrest of Energy Unlimited. "With only seven projects getting contracts, small companies like ours -- being independent and providing consultancy services -- are going to have a struggle to survive. There will not be much of a wind industry left in Scotland."

Forrest is surprised at the Scottish Office's stated anxiety over public concern about the landscape impact of wind. He explains this is not borne out by the experience of the few developers who have already built wind farms in Scotland. "The projects that have gone ahead have received virtually no publicity at all, and certainly almost no negative publicity."

The low level of prices bid into the SRO continues to be a contentious issue. Mike Anderson of Renewable Energy Systems believes they are too low to be sustainable, while Peter Musgrove of National Wind Power wonders how financeable they will be. Bill Grainger from Border Wind says: "We cannot see how they can build projects for that. I just wonder if I would want a contract at that price for 15 years." But Steve Cowie believes site selection was a crucial factor in helping ScottishPower win its two contracts. "We spent a lot of time trying to find good sites. We knew it was going to be very competitive."

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