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United Kingdom

United Kingdom

In search of a whole new approach

The opening up of the UK electricity market and the effect of the forthcoming general election were a focus at the British Wind Energy Association (BWEA) conference held in Exeter in September. The event proved that the industry has taken a leap forward in understanding the issues to be addressed as it moves towards an open market but there was little consensus on where to go or how to get there. The packed programme was overly ambitious. The government view presented was that increasing the UK content of wind developments is a key to securing government support for wind energy. Two presentations setting out different models for green trading excited particular attention. Antipathy to certain instrusions in the landscape was yet again a keen topic.

The need for a coherent strategy to take Britain's wind industry into the liberalised market has never been more urgent. This was the compelling message to emerge from the UK's 18th annual wind energy conference. The opening up of the UK electricity market and the effect of the forthcoming general election were the pressing preoccupations dominating the three-day gathering of the British wind community at Exeter at the end of September.

This year's event proved that the industry has taken a leap forward in understanding the issues it should be addressing as it moves towards an open market. Yet it is demonstrably still a long way from any clear idea of exactly how it should promote its future interests. The British Wind Energy Association's new policy document, launched at the conference, goes some way towards setting out a number of the industry's demands, but nonetheless falls short of providing a clear course of action for it to achieve its aims.

The British Wind Energy Association (BWEA) conference -- held 25-27 September at Exeter University -- boasted a packed programme which in the event turned out to be overly ambitious. Speakers and audience alike were often equally frustrated by the limited time allocated to each presentation. Several speakers during the conference urged delegates of the need to work together to promote wind's interests. The first was keynote speaker Colin Moynihan, president of the BWEA. "This is the year that collectively we have to influence policy," he said. He pointed out that the first of the challenges confronting the renewable energy industry is the approaching general election. Whichever party won the election would call for an immediate review of renewable energy policy for the ten years after the current Non-Fossil Fuel Obligation (NFFO) ends, he predicted. "It may be that the review will lead to a completely different support mechanism after NFFO."

Now is the time, he said, for the industry to play a role in helping set up the framework for the next decade. Moynihan warned the BWEA that its approach must be one of constructive dialogue. He stressed the importance of sitting down with government ministers and officials and understanding their concerns rather than submitting a barrage of demands. And the biggest pressure on government departments comes from the treasury. "Whoever is in government this time next year, treasury officials will still be the same treasury officials. And those treasury officials will still be saying 'should we be subsidising any form of technology when the energy balance has changed competitively against those subsidies?'"

Moynihan continued: "One of the most important challenges we have is to develop policies to make sure the true environmental costs of all forms of energy production are taken on board, are recognised and are costed." He added: "If we can do that we have a much stronger commercial argument on the wind energy side."

The government view

Godfrey Bevan of the Department of Trade and Industry said that increasing the UK content of wind developments is a key to securing government support for wind energy. "Ministers are extremely keen to see UK content in turbines as a whole, in components, and in the consultancy industry. That is the driving force leading to access by the UK industry to world markets." Looking ahead to 1998, Bevan said: "We have to have in place the arrangements to ensure NFFO-1 and 2 projects continue in being. We have to ensure there are opportunities for projects outside NFFO to go forward. The industry will have to become competitive. We need to address the economic, contractual and technical issues. It's a process to which the industry needs to contribute."

Drawing attention to the high rejection rate of planning applications for wind power projects, he believed it would nevertheless be a mistake for the industry to try to change the planning structure. "What we need to do collectively is to work with the planners and the public to raise the level of information to try and get an improved performance in planning applications." Lessons can be learned by looking at the approach of developers who have had a high rate of planning success with their projects, he said.

Absorbed by the future

Two sessions on electricity markets provoked discussion that continued long after their close. With liberalisation of the British electricity market only two years away, and with the additional prospect of NFFO-1 and 2 power purchase contracts expiring in 1998, the future of trading renewable electricity is fast becoming one of most absorbing issues for Britain's wind industry. It was therefore no surprise that two presentations setting out different models for green trading excited particular attention.

A "Green Pool" is the approach advocated by Mike Davies from Ian Pope Associates. In a narrow time slot that did not do justice to the subject, he explained how the green pool would provide a market for electricity from renewable generators. It would be owned by them as shareholders and would be open to customers throughout Britain. Although the concept is still on the drawing board, he hopes to launch it using existing renewable generation at first -- mostly from Scottish Hydro. After 1998, output from NFFO-1 and 2 generators could be brought into the scheme to supply the huge and newly available domestic market.

By contrast Martin Alder's Renewable Energy Company began trading renewable electricity earlier this year. At the moment it is confined to supplying customers of more than 100 kW but Alder points out that in 1998 the market opens up to 20 million more. "I am sure we can find a sufficient number of customers that are going to exercise their choice as to where they get their electricity from." Liberalisation will provide the industry with a long term solution to planning and developing the industry, he said.

In the ensuing discussion Godfrey Bevan of the DTI commented that the emergence of these companies trading outside the NFFO encourages government to continue some form of support mechanism for renewables that cannot yet survive unaided. "Having a success story, showing that there are now some technologies that are on their way to having a stable market without NFFO, is a crucial step in maintaining NFFO or another type of support for other renewables," he said.

less conventional support

Andrew Garrad from consultants Garrad Hassan cautioned that the days of support -- either through mechanisms like NFFO or even through contracts as in Denmark and Germany -- could be numbered. "Perhaps we ought to be looking at this sort of scheme [green trading companies] rather than for support in the conventional sense." He warned that after the election there could be a completely different market with different ground rules.

Concern focused on the downward trend of prices. "The markets are going to be increasingly competitive," warned Nicola Steen of the Association of Electricity Producers. "That means the pressure on electricity prices will continue, which is a tough prospect for renewable energy." Martin Alder agreed but said there is a limit to how much more aggressive competing forms of generation can be: "We expect the prices to come down but the margins in the supply business are already very small indeed." He complained of the high distribution costs and profit margins allowed to the regional electricity companies on their distribution businesses.

Consultant David Milborrow called for a simpler mechanism for buying renewable electricity along the lines of the Danish and German models. "We have a system so ferociously complicated. Isn't there some scope for simplifying it?" However, Steen disagreed. "If you simplify you can sometimes lose out," she said. Her worry was that fixed price contracts are sometimes set too low for generators.

The discussion turned to the difficulties for generators in securing finance for schemes which will not have the security of the 15 year contracts under NFFO. "We must not underestimate the importance of those 15 year contracts," said Jonathan Johns from accountants Ernst and Young. "The attitude of financiers is very much influenced by the 15 years." But the ultimate security of the industry lies in developing a market, he claimed. Endorsing this view, Alder added: "When the market opens up -- when you have got 20 million potential customers -- that provides you with a degree of stability that hitherto has not been available."

Winding the session up Garrad commented: "This discussion has demonstrated that we do not have a clear idea of where our future is or indeed how to get there. We should be gathering these issues together. We should be working together and formulating some sort of coherent policy for all of us."

Invisible wind farms

The antipathy of a section of the British public to certain instrusions in the landscape was yet again a keen topic at a BWEA conference. Robert Tudway of solicitors, Nabarro Nathanson asked: How do you create a large wind farm without seeing a large wind farm? The answer, he said, is to distribute it geographically. "It is created as a single entity. It is planned at one time, it's under single ownership and financed at one time. But having created it you then distribute it amongst a number of different sites," he explained. The benefits of a geographically distributed wind farm are economies of scale, spread of risk, ease of financing and increased scope for attracting community funding.

The environment, with its associated planning and public acceptability issues, continues to figure high on the conference agenda. BWEA director Hugh Babington Smith reminded delegates that the environmental argument is the key to persuading local communities of the case for wind power.

A welcome perspective on media coverage was provided by Gaynor Hartnell of the BWEA. Her analysis of four month's of press cuttings dispelled fears that wind power receives an overwhelmingly negative press. Surprisingly, the coverage turned out to be far more balanced than most in the audience had assumed. Out of the 959 press cuttings analysed, 47% were negative, with the remainder either positive or neutral in tone. But she emphasised that the figures were heavily influenced by the high proportion of anti-wind farm mail on the letters pages. Of these letters, 22% originated from Robert Woodward, vice president of pressure group Country Guardian. One of the most significant findings of the analysis was Country Guardian's use of the "Round Robin" -- the same letter sent to different newspapers. Fifteen of these accounted for 32% of all negative letters. Two Round Robins from Woodward appeared in 31 newspapers throughout the country.

Turning to articles, Hartnell pointed out that negative ones tended to dominate at 41% of the total, with positive articles accounting for 25%. Features, however, which by nature require their writer's to tackle subjects in more depth, were positive overall with 52% favourable towards wind energy.

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