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CULTURAL CLASHES ON STRATEGY

A common consensus in the international wind community on how best to shape an energy market of the future still seems a long way off if the mood at a European Wind Energy Association special topic conference on economics is anything to go by. Cultural differences in outlook seem to be the main stumbling blocks. An all important session on external costs concluded that politicicans should be encouraged to think globally.

External costs, green pricing, the meaning of "economic," wind's value on a utility grid, and who should pay the cost of transmitting clean power to the consumer were among the subjects aired at last month's European Wind Energy Association special topic conference on wind energy economics. But perhaps one of the most telling themes of the event was that of cultural difference. A common consensus in the international wind community on how best to shape an energy market of the future still seems a long way off.

One key question surfaced several times: "Just what do we mean by economic?" A minority argued that wind energy costs have already achieved parity with the conventional sources, but the wider view was that further work needs to be done to highlight the low external costs of wind and the monetary benefits associated with local generation. Utilities were generally reluctant to recognise this additional value, but Danish utilities, it appears, are quietly taking advantage of the higher value of wind in many rural locations.

On several issues, it was interesting to observe cultural differences in outlook between mainland Europe and the British Isles (and the United States), where electricity production and distribution is privatised. In Britain wind farm grid connection costs are the responsibility of the individual wind farm developers. In Denmark, however, these costs are effectively shared amongst all electricity consumers. This goes some way to explaining apparent differences in cost between installations in Britain and in Denmark.

Again, when the notion of green pricing (where consumers voluntarily pay extra for renewable energy ) was raised it received support from the British and American representatives, but was roundly condemned by the Dutch as being elitist and divisive -- only the affluent few would be able to afford to pay extra for electricity from renewable energies.

External costs

The all important session on external costs was introduced by three keynote speakers. Anil Markanbya from the Harvard Institute for International Development provided a clear and well structured review of the philosophy and background to the external costs debate which included comparisons between estimates for Britain and Germany. This was complemented by a more detailed analysis for Denmark by a team from the Risø national laboratory. The third speaker, Mr P Bezroukikh from the Ministry for Fuel and Energy in Moscow, reviewed the developing interest in wind energy in Russia, a paper perhaps more suited to the "national programmes" session.

After five hours of papers and discussions a general consensus emerged. Despite the uncertain nature of some aspects of external costs, the various studies yielded reasonably consistent figures for the effects associated with health and damage to crops, forests and fisheries. There was less agreement on effects associated with global warming -- at least partly because global warming itself is a topic of intense uncertainty. On the question of internalising external costs -- reflecting them in energy pricing -- a cultural divide again emerged. In Denmark, external costs are already firmly established in energy pricing whereas, at the other end of the spectrum, there seemed little prospects for them being accepted in Britain. The recent rather clumsy and highly unpopular decision to impose sales tax on domestic UK electricity was seen as a missed opportunity. One suggestion made was that European Union energy taxes should be settled by majority vote.

It was noted that some internalisation of external costs already occurs. Any new coal plant built in Europe, for example, will need to be fitted with flue gas desulphurisation which pushes up costs accordingly.

Driving down prices

Although Britain came in for criticism for its attitude to carbon taxes, it was recognised that the competitive nature of the Non Fossil Fuel Obligation had driven down prices. Several speakers made the point that one of the best ways of bringing down wind prices was to ensure continuity in development, as improved production techniques consistently brought prices down in all technologies. The further benefits to be gained were variously estimated at between 15% and 30%.

A warning note was sounded, however. There may be too many wind turbine manufacturers chasing too few orders and some shake out in the industry may be inevitable. Other areas where it was expected cost reductions would be achieved were through improved control systems and further development of direct drive (gearless) machines. There was some uncertainty, however, as to the benefits to be derived from the continued development of larger machines. It was argued that operation and maintenance costs might rise since there were difficulties bringing equipment to lift the heavier nacelles and blades, particularly in remote (but very windy) locations in Scotland and Ireland.

Chris Flavin, from the US Worldwatch Institute discussed possible moves away from large centralised electricity supply systems towards the use of smaller power sources, even to the extent of individual houses being equipped with fly wheels to smooth the output from their renewable power sources. Meantime, a lengthy discussion on the market for stand alone wind diesel systems identified large market opportunities, mostly in China and the developing world.

When it came to discussing overall strategy the wind energy community should encourage politicicans to think globally, said David Lindley of Britain's National Wind Power. This would ensure that considerations such as external costs were properly reflected in cost/benefit analyses. It would also correct imbalances between the vast expenditures on defence and the far more modest expenditures on energy research.

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