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TACIT SUPPORT FOR CREDIT FOR LOCAL GENERATION
1 January 1996
Tacit support for the wind industry's claim that it should receive credit for reducing transmission losses has come from the UK's office for electricity regulation, OFFER. It notes that system losses in England and Wales are rising steadily and now account for $210 million annually -- around 800 MW are lost at times of peak demand. To offset this trend, the power industry is being encouraged by OFFER to move towards more cost reflective pricing, dampening generation growth in the north, encouraging it in the south. "This should eventually be good news for wind farms in the power starvedsouthwest and other zones remote from power stations," comments UK wind consultant David Milborrow. However, it might mean reduced payments in the future for installations in the north and in Scotland. At present, payments made to Non-Fossil Fuel contract holders are fixed and do not necessarily reflect the value of the energy displaced. "There are strong arguments for examining other aspects of this issue. It seems likely that renewable generators may be credited with "capacity credits," based on the so-called Triad benefits," comments Milborrow. These reflect the value of capacity to the system at peak demand. Wind projects generally achieve higher than average capacity factors during these periods and the additional payments could push up the revenues by around 10%.
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