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United Kingdom

United Kingdom

Request for portable contracts -- Siting flexibility sought

Renewable energy developers in Britain are calling on the electricity regulator to grant them flexibility in siting projects contracted under the Non-Fossil Fuel Obligation (NFFO) system of renewables support. Under present NFFO rules, developers who fail to commission their projects -- usually through inability to secure planning consent -- cannot transfer their NFFO or Scottish Renewables Obligation (SRO) contracts to another site. But with the high level of site-specific project failures, many are urging the Office of Gas and Electricity Markets (OFGEM) to relax the rules to allow some location flexibility.

The Department of Trade and Industry (DTI) is also keen on the measure, as many more projects could be realised. Without an increase in the build rate of new renewables, the government will fail to achieve 5% of UK electricity from renewables by 2003 -- its interim goal on the way to its overall target of 10% by 2010. Out of 706 renewable energy contracts awarded under the last three rounds of competitive bidding under NFFO and the SRO, totalling nearly 3000 MW, only 153 projects for 416 MW have so far been commissioned. In the case of wind, 236 contracts were awarded for 1042 MW declared net capacity (DNC), but only 30 projects have been built, just 76 MW DNC, or 177 MW installed.

One developer who has been urging OFGEM to consider the issue of "portable" NFFO contracts is Peter Crone from Devon-based Farm Energy. He points out that otherwise suitable sites are being held up by objections lodged by statutory bodies, the worst offender by far being the Ministry of Defence. Some of their objections could not have been foreseen when developers applied for their NFFO contracts, says Crone. He would like NFFO contracts for sites which cannot break through such red tape to be able to be transferred anywhere within the NFFO or SRO areas. "If the government is to retain any prospect of hitting its 2003 target, this has got to happen. Otherwise, not enough capacity is going to get built with the one strike and you're out system we have at present."

Legal block

But OFGEM is not convinced that contracts can be transferred to different sites. It has been discussing the issue with the DTI and the Non-Fossil Purchasing Agency, which contracts with renewable developers on behalf of the public electricity suppliers. "We are hoping we can introduce flexibility to enable contracts to move," says OFGEM's Kate Smith. "But we are not satisfied that the situation can legally be changed at the moment."

As part of the qualifying arrangement, developers must keep to all the terms of their contracts -- including the site dependent aspects, she points out. "Now our legal team is looking at it with regards to site location. We want to be satisfied that contracts will be valid if they are moved."

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