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NO REVENUE FOR HARD STRAPPED OPERATOR, SCOTTISH OFFICE FAILURE

Scottish Office failure: no revenue for hard strapped operator

Government bungling has put Scotland's flagship wind farm into serious financial difficulty. Failure by the Scottish Office to set a fossil fuel levy has put it in the embarrassing position of being unable to honour its contracts under the first Scottish Renewables Obligation (SRO-1). As a result Trigen's Hagshaw Hill wind farm has only received a fraction of the payment due to it since the project came on line in November 1995.

France has announced its intention to start a renewable energy programme with the aim of developing between 250-450 MW of wind power over the next ten years. The programme -- the fine details of which have yet to be worked out -- was made known to the public at the end of the year by Claude Mandil, the powerful general director of energy at the French ministry of industry.

According to Mandil the programme will be in the form of a series of competitive tenders, similar in structure to the British Non Fossil Fuel Obligation (NFFO) which, since its start in 1990, has led to the installation of nearly 200 MW of wind plant. As in Britain, prospective developers in France will bid for power purchase contracts to supply a predetermined amount of wind power to the grid. The capacity to be requested in each call for tenders will be decided by government.

"We will not set a specific tariff, only floors and ceilings. In the calls for tenders, candidates will be invited to state the price they require EDF to pay for their electricity to make their projects viable," explains Mandil. The aim will be to use a competitive system to bring the price of renewables down to a level where they can compete on the open market, he adds. Wind, though, is already close to being competitive, according to the programme working group, says Mandil.

Flexible approach

The amount of renewables to be developed will "depend on political input, quality of potential resources and evolution of the renewables business," says Mandil. The programme's approach will be flexible from year to year and the different renewables technologies will each be treated on their own merits.

As yet Mandil's plan has not been officially endorsed by the French energy minister, Franck Borotra, and it could be some time before legislation is introduced. Borotra is not known as an enthusiastic supporter of new energy sources and belongs to the Chirac old-guard. Ministry sources, however, confirm that Mandil's word is usually taken as law and there is no reason to expect otherwise in this case.

Mandil's announcement followed a year of discussion between industry ministry officials, France's fledgling renewables industry, national utility Electricité de France (EDF) and industrialists. The decision to opt for a system of competitive bidding within a protected market came as somewhat of a surprise. Talks between the involved parties had concentrated on setting higher tariffs for electricity from renewables sources of energy, similar to the system of market stimulation for wind and other clean energy technologies in Germany.

Ruffled nuclear feathers

The decision to require EDF to sign power purchase contracts for fixed amounts of wind power is likely to have ruffled the giant nuclear utility's feathers. Shrewd observers point out, however, that EDF will now be able to improve its public image for a much smaller price than if it had been required to pay fair tariffs to all independent producers, including co-generation and small hydro as well as wind.

The greatest achievement of the talks, adds Mandil, is the new found understanding between all parties. "Until now EDF tended to look upon its tariffs as an untouchable God's truth. It is one of the big successes of this working group to have succeeded in getting the partners to listen to one another," he says.

News of Mandil's intention to create a protected market for renewables was revealed in an interview with him published in the most recent issue of a French quarterly journal on renewable energy, Systèmes Solaires. The issue featured wind power as its main theme and, indeed, wind emerges as the winning renewable in the new programme, with solar and small hydro to play lesser roles.

In the interview, Mandil indicated that the decision to create a market support structure for renewables was a direct consequence of the national energy debate in 1994 where the renewables lobby pushed hard for a stake in France's energy future. If EDF had had its way, contracts for no more than 50 MW of wind power would have been issued over a ten year period. In contrast the renewables lobby had requested a minimum of 500 MW.

"It is close to what we wanted. At last we now have rules and goals for development," says a delighted Philippe Bruyerre of Espace Energie Developpment (EED), developer of a wind farm at Dunkirk, the first in northern France. Equally delighted is Jean-Michel Grave of Norelec, a large electrical equipment supplier and wind plant developer. He says that many of his suggestions have been incorporated into the minister's concept, particularly efforts to encourage the growth of a domestic wind industry as well as to attract the best foreign technology to France.

Details to come

The job of turning a concept into solid legislation will be that of ADEME, the French Energy and Environment Agency. The agency's Jean-Louis Bal confirms that the tiny French wind industry will not be forgotten: "In terms of industrial policy we will do whatever is allowed by the European Union to help our local firms start on a good footing," he says.

According to Bal, the tenders are likely to be issued in five calls for proposals spread over a number of years, starting with three annual calls for 50 MW each, followed by 100 MW and 200 MW at three year intervals. He adds that these amounts of wind power need not be maximum limits if the projects and prices proposed are good enough. "Of course 350-500 MW is not such a big deal when compared with our German neighbours, but it is already a serious level at which to start an industry."

No decision has been made about applying different ranges of tariffs for different wind speed sites, continues Bal. However, there could be additional money for regional authorities wishing to support a particular co-ordinated initiative in their area. The thorny question of how to avoid a rush for high wind speed sites in a competitive market is one the French are only too well aware of. "We have to avoid the British NFFO drawbacks, such as concentration in the windiest parts of the country with the public acceptance and integration problems that creates," says Bruyerre. "I disagree with other developers and believe we should keep the present legal limit of 8 MW for each project and be very careful about the speed of implementation."

One aspect of Mandil's announcement yet to receive much attention is the part played by the industry ministry's Direction du Gaz, de L'Electricité et du Charbon (DIGEC), the regulating authority for electricity production and supply in France. Until now it has acted almost entirely as an underling of EDF, simply rubber stamping the utility's policies. With its formulation of a plan for a separate renewable energy market, the authority has shown signs of flexing the muscles it was born with and becoming a much needed arbiter in the French electricity industry.

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