United Kingdom

United Kingdom

Reeling to vintage roc and roll

Few people would have come away from the British wind industry's annual conference and exhibition in Scotland this year in any doubt that the UK stands on the cusp of a wind power boom. Barriers still remain, the conference heard, but government ministers assured that the political will is there to remove them. A key topic of the conference was an innovative proposal for a surprisingly simple fix of the Renewables Obligation, aimed at solving a series of its inherent flaws without rocking the market.

Proof of the government's desire to see Britain as a world leader in wind energy and no longer a world trailer was much in evidence -- and enthusiastically celebrated -- at the British Wind Energy Association's 25th annual conference in Scotland

Few people would have come away from the British wind industry's annual conference and exhibition in Scotland this year in any doubt that the UK stands on the cusp of a wind power boom. Barriers still remain, the conference heard, but government ministers assured that the political will is there to remove them. A key topic of the conference was an innovative proposal for a surprisingly simple fix of the Renewables Obligation (RO), aimed at solving a series of its inherent flaws without rocking the market (page 52). The proposal, dubbed Vintage Roc 'n' Roll, is designed to tear down the barrier to commercial financing -- identified at the conference as the key hurdle to rapid growth of wind power in Britain.

Industry confidence was at an all time high. This was reflected in the record numbers at the three day event. Over 770 delegates and 100 exhibitors flocked to Glasgow's Scottish Exhibition and Conference Centre for the 25th anniversary conference of the British Wind Energy Association (BWEA), held October 28-30. It was an appropriately vintage event, given its domination by the Vintage Roc 'n Roll discussions, though it was a Scottish reel rather than rock n' roll that followed the gala dinner.

"At long last we have true political support for the industry," said BWEA chief executive Marcus Rand. And about time too, he might have added. After 25 years, the UK has 580 MW of wind plant up and running -- just 2% of Europe's total, he pointed out.

But progressive policy making in recent months and the government's energy white paper, published earlier in the year, give renewables -- particularly wind -- a central role in energy strategy. The government expects some 7500 MW of wind to be in place by 2010, said Rand. This would mean wind providing power to one in four homeowners and meeting 80% of the UK renewables target, he said. "It means some 25 MW needs to be installed each week, every week for the next six years." This is 14 times as much capacity as was installed the last 12 years.

Another milestone during the year was the launch of tendering for the second round of offshore development involving bigger wind farms sited further out to sea. This is proof of the government's desire to see offshore wind reach a truly significant scale, said Rand. "A scale that would mean we become at long last a world leader and not a world trailer."

Two solid barriers

And yet, he warned, to achieve the targets two key issues must be dealt with by the industry and government: freeing up a flow of finance and improving the rate of onshore wind plant consents. Of the two issues, bringing down regulatory barriers to the financial markets is the most important. "How do we release the £6 billion of finance needed to build wind's contribution to the country's renewables targets," Rand asked. The Renewables Obligation (RO) has been a major force for change and its principles are supported by the financial community. But under its present rules, future prices of Renewables Obligation Certificates (ROCs) cannot form part of a Power Purchase Agreement (PPA) because they are impossible to predict and hedge against.

"Banking of large scale projects such as those emerging from the round two offshore process look at this stage to be impossible," continued Rand. Action is needed now so that the investment community and the industry know where they stand, he said. "The decision the government takes on the future of the RO could be the key make or break on whether we meet our ambitions."

The heavily debated Vintage Roc 'n' Roll proposal is designed to set the financial market dancing to wind energy's tune. Presented by Ian Temperton, consulting to the BWEA, it was debated by the industry and financial community in workshops as well as the plenary session.

Government, meanwhile, assured that the industry's message about the need for a market that frees up commercial financing has got through. Energy minister Stephen Timms said: "I can confirm that we are fully on board and fully committed. We will listen to your concerns and play our part in creating and maintaining the framework for industry development and success." It was not so much his words at the conference that reassured the BWEA leadership, however, as what he said an informal gathering on the eve of the conference. "The government have very clearly got the message that we have got to get something in place soon before the 2005/6 review of the RO," BWEA chairman Alan Moore reported.

This was confirmed by the Scottish Executive's deputy minister for enterprise, Lewis Macdonald. The Scottish Executive and UK government are "urgently considering reviewing current obligation levels" in the light of concerns over the need for long term certainty to maintain confidence in the industry, he said.

For the first time, an energy regulator addressed the wind industry and, even more novel, appeared open and willing to hear its concerns. Just a few weeks into his new job as chairman of Ofgem, Sir John Mogg said: "My purpose here is to listen and benefit from the Scottish perspective and Scottish experience." He promised delegates that he would play his part in transforming the industry to "optimise the potential for the best onshore and offshore wind resources in Europe." Mogg unveiled proposals that would allow network operators to invest early in the transmission system to accommodate increased amounts of renewable generation. "We must do something now to allow transmission companies to invest in anticipation of future needs," he said.

From their discussions with Mogg at the conference, industry players were optimistic that the new Ofgem chairman will be better disposed towards wind than his predecessor, Callum McCarthy. David Still of the Department of Trade and Industry (DTI), commented: "The winds of change are going through Ofgem at the moment and that is very encouraging."

Hearts and minds

In a packed conference program, over 130 speakers examined major issues such as planning, aviation, grid, finance and offshore. In a departure from previous years, the program featured three parallel sessions of plenary, workshops and technical sessions.

Winning hearts and minds remains a perennial crusade for the industry and was highlighted by a number of speakers. Attitudes -- particularly of local government officials dealing with siting consents -- are being shaped by a minority of people who are opposed to wind power, said Rand. The industry needs to win support of key decision makers on local planning authorities to ease wind through the consenting system. The attitudes and actions of planning officials and councillors throughout the UK are crucial, said Rand. "Our nation's energy future is in the hands of a few thousand people and they are not in this room," he added.

"We need to do more to explain the benefits of wind to the public and those who make decisions," he said. The government's anticipated £2 million information campaign will certainly be a step in the right direction. "But we as an industry need to roll up our sleeves and deliver our own proactive communication campaigns." Rand announced a national campaign, part funded by government, to engage children with the wind industry through art or photography.

The rate of gaining planning consents for wind projects may have improved, but the concentration of development effort in Scotland could pose a threat to the industry, claimed Chris Tomlinson from the BWEA. "In the planning media the volume of interest in Scotland is sparking concern over both the number of schemes and raising questions over the benefits to communities near wind farms." The BWEA needs to take a policy line on the issue, he said. He pointed out the potential of other areas of the UK. Despite favourable attitudes of planners in Yorkshire, Humberside and the West Midlands "no-one is going there," Tomlinson said.

Army in the way

One of the major obstacles holding up development of hundreds of megawatts of wind is its alleged interference with radar systems. Half of all UK wind power proposals are objected to on aviation grounds -- principally radar, said Ian Russell, chief executive of ScottishPower. Among them is ScottishPower's proposed Whitelee wind farm, which if it went ahead would be the largest in Europe. "Viable solutions are already in operation for these problems in other countries like Denmark, Germany and the USA," claimed Russell.

John Overton of the Department of Trade and Industry (DTI) stressed that the government, its agencies and stakeholders are all seeking solutions, but "we are not saying we have found solutions yet."

From the Civil Aviation Authority (CAA) Andy Knill maintained that the way it manages airport radar differs fundamentally from other countries. "We are more reliant on technical solutions to achieve operability." Julian Chafer of the Ministry of Defence (MoD) added: "If somebody could say categorically that experience from overseas is directly applicable to the MoD, then we would look at it." Chafer claimed the MoD is trying its best to reduce the number of its objections. It had recently withdrawn an objection to a proposed wind farm in the Scottish Borders despite its location within a military low flying area. MoD is also trying to shorten proposal turn around times. "But we do have limited resources, he warned. He explained that in 2002 the MoD had to examine over 1000 wind farm applications and he expected that number to be exceeded for 2003.

This most insistent recurring theme throughout the three days of the conference was how the industry will raise the finance it needs under the present Renewables Obligation support mechanism. Financing has now overtaken planning as the key issue facing wind. Andrew Garrad from consultants Garrad Hassan summed it up: "We used to be in a position of having PPAs but no permits, now we have permits but no PPAs."

investor uncertainty

Developers and the financial community need more clarity around the government's intentions for the future of renewables after 2010 to allow them to invest with certainty, explained Jeremy Wheatland from LEK Consulting.

Presenting findings from a new study based on interviews with investors and the industry, Wheatland claimed that most believe the RO regime to be "fine." The overriding opinion is: "Do not fundamentally change it." The interviews identified certain issues that need to be addressed if the UK's renewables targets are to be met. Certainty around ROC values after 2010 is considered vital, he said. Many people want to see the government's review of the RO brought forward from 2005/6, and they want more clarity about what technologies will be eligible for ROCs. Other recommendations are for joined up government, for Ofgem and the DTI to agree who is to be responsible for transmission upgrades, for ring fencing of investments, for a rolling obligation, and clear targets for 2020 and beyond.

The BWEA's James Glennie pointed out that the industry already has significant financial commitment from the government. "The challenge we have is not to go back to the government and ask for more money, but to take the money that is there and make it more bankable." The BWEA is consulting members and stakeholders to seek a solution to the key problem: how to create enough certainty over the future value of wind energy to allow developers to finance developments. Glennie insisted that there has to be a single, clear, unequivocal industry view.

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