Yet in a year that demonstrated impressive political will to make renewables work, new capacity fell 50% short of the 300 MW anticipated for 2003 by the British Wind Energy Association (BWEA). Construction of projects was delayed for a variety of reasons, says the BWEA's Alison Hill. Some delays were due to planning constraints on developers as conditions of obtaining consent, and some due to grid access problems, she says.
The record amount of wind capacity to gain site permits in 2003 would at first sight suggest that permitting has become less of an issue in the UK. Over 1300 MW was granted consent, bringing the total of permitted projects awaiting construction to around 2000 MW. Of this, however, 943 MW is offshore, leaving around 360 MW of onshore consents in 2003. Added to the those from previous years, total consented wind capacity on land is now 800 MW. Developers are still reporting difficulties in obtaining siting permits, with opposition to planned wind farms in some areas as strong as ever. "There are people out there who object to whatever is proposed -- onshore and offshore," says one.
The trickle of wind farms that do emerge successfully from the consents process has led to a shortage of projects in which utilities can invest. All the major electricity utilities in the UK have plans to meet at least part of their renewables obligations through operating their own plant. Powergen, through its renewables department, has plans to spend around £1 billion on renewables leading up to 2010. "Viable onshore developments are difficult to source and have a long gestation period," says a Powergen source. Nowadays the company is only looking at projects of 15 MW or above because "development is very resource intensive," he explains; "You need deep pockets to get things moving." There is also a huge amount of inertia and constraints that developers have to overcome. Exhaustive consultations, bureaucratic hurdles, obtaining connection agreements, securing supply contracts and obtaining financing are daunting even to a big player like Powergen. "You work so hard to put up a few megawatts; in some respects it's easier to build a 2000 MW gas plant," he says. "Buying the turbines is the easiest bit. You try plugging them in and see what happens."
Meantime, the trend towards larger projects is taking many planning decisions out of the hands of local authorities and into the remit of the Department of Trade and Industry or the governments of Scotland and Wales. And large wind farms will be more likely to be project financed.
This has all been a learning process for the industry, says Jeremy Sainsbury from Fred Olsen Renewables. The company's 50 MW Crystal Rig project was the largest onshore wind farm to come online last year. The consenting procedure for generation projects of 50 MW and over -- known as Section 36 consent -- was not designed with wind farms in mind, says Sainsbury. Consents obtained under Section 36 are not as flexible as locally granted permits and throw up a whole stack of small issues that are viewed by banks as unacceptable risks -- and which therefore have to be dealt with before the projects can be financed and built. But the industry is now getting up to speed with Section 36 procedures, he adds.
Stuck in a time warp
Around 30% of all consented projects are tied up with power purchase contracts awarded under the UK's now obsolete tendering system, the Non-Fossil Fuel Obligation (NFFO), or the Scottish Renewables Obligation (SRO) in Scotland. Under NFFO rules, until these contracts are fulfilled, no renewables projects on the sites can earn income under the UK's newer support mechanism, the Renewables Obligation (RO). The rule, which is designed to stop developers from abandoning their NFFO contracts in favour of a more lucrative income from Renewables Obligation Certificates (ROCs), effectively "sterilises" the sites, so that no other wind farm developers can build there.
One company that has so far failed to develop its projects, despite gaining consents in 2001, is Renewable Energy Systems. RES holds two SRO contracts totalling 55 MW for projects at Glens of Foudland in Aberdeenshire and Black Hill in Borders. According to Ian Mays of RES, delays in developing the sites have been associated with lack of interest from investors in SRO projects. "The investment community are not interested in SRO contracts; what they are interested in are ROCs," he says. "However, we hope to have resolved the situation on Glens with a view to enabling us to start construction this year."
Mays declines to comment on whether the project will be developed under the SRO or RO. One way out of a NFFO contract is for a developer to argue for a termination of the contract on the grounds that the "net present value" of the project would be zero over both the lifetime of the project and the lifetime of the contract.
The year did have its highlights. Champagne flowed as well as power when the country's first major offshore wind farm began producing electricity at North Hoyle off the north Wales coast in November. In February, the government published its energy White Paper which put renewables -- and wind in particular -- at the heart of its energy policy. The paper translated the government's aim of 10% of electricity from renewables by 2010 into a formal target and set out an "aspiration" of 20% by 2020.
Energy minister Stephen Timms followed up in December with regulatory changes designed to boost investor confidence in renewable energy. He announced an increase in the renewables obligation from 10% in 2010 to 15% in 2015. The RO requires electricity retailers to buy renewable energy certificates to demonstrate they have secured a proportion of their power from renewable sources. The longer profile of the RO will help developers secure longer term power purchase agreements for the physical electricity -- an essential prerequisite for obtaining financing for projects on affordable terms.
The government is also acting to remove the obstacle presented by Britain's cumbersome process for site permitting, publishing draft planning policy guidance which requires local planning authorities to take a more positive and proactive approach to wind energy.
Nine projects with a combined 82 turbines were built during the year. The two largest onshore wind farms were in Scotland and Northern Ireland (table); meantime England and Wales maintain their trend towards smaller projects, with none larger than 8 MW. Vestas and Bonus proved to be the most popular suppliers. A better build rate is forecast for this year. According to Hill, the BWEA is fairly confident of at least 400 MW. "The government has done what it can, she says. "It is now up to the industry to deliver."