United Kingdom

United Kingdom

Creeping UK optimism

At last, a renewables market place is emerging in the UK with innovative mechanisms that offer real long-term prospects. Signs of confidence are already there to see: wind plant being built in anticipation of the renewables obligation and merchant wind power taking advantage of climate change levy avoidance and the need of business to "green" itself. The financial community, too, is apparently taking more of an interest in the renewables sector. But all the market mechanisms in the world won't count for anything unless the UK planning impasse is sorted out. This is the hardest nut, but one that must be cracked.

These are interesting times to be in renewables in the UK. As some of the elements of the new market fall into place -- or at least become clearer -- answers should be forthcoming to several of the questions that have bedevilled the industry this year (pages 47-52). It should find out exactly how far the new electricity trading arrangements penalise small renewables generators -- particularly wind -- when NETA "goes live" in November. In October, it should become clear how much suppliers are prepared to pay for renewables output in the auction of existing NFFO capacity. And when the "renewables obligation" consultation document is published next month, the industry should learn how much the government thinks electricity suppliers must pay to duck out of their obligation -- indicating what sort of price renewables can expect to be paid.

It has been a long haul to get this far. Consultations with the industry have been non stop for over three years and are still ongoing. This is not only inexcusable, it is damaging. At last, however, a market place is emerging with innovative mechanisms that, while not perfect, offer real long-term prospects. An exception to this is NETA, which is deservedly condemned by just about everyone except the DTI and OFGEM.

It is interesting to note that most of the griping about the changes is not coming from developers, but from commentators and other players. With an eye on the opportunities ahead, developers are quietly getting on with the business of preparing sites that a couple of years down the line may be ready to participate in the market. Signs of confidence are already there to see: wind plant being built in anticipation of the renewables obligation and merchant wind power taking advantage of climate change levy avoidance and the need of business to "green" itself. The financial community, too, is apparently taking more of an interest in the renewables sector.

But all the market mechanisms in the world won't count for anything unless the UK planning impasse is sorted out. This is the hardest nut, but one that must be cracked. Yet over this issue, too, there is a general air of optimism. The government has initiated a policy of regional planning for renewable energy and the wind industry has played its part to help regions set targets for wind (page 21). Only time will tell if all this is enough. But if it does indeed make a difference, then we are in serious danger of a feel-good factor creeping into British wind energy. Now that would be a novelty.

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