United Kingdom

United Kingdom

One firm scoops most of Scotland's SRO-3 wind power tender

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All 150 MW worth of contracts awarded to large wind projects in Scotland's latest round of support for renewable energy went to just three developers. Moreover, one developer dominated the competition, securing well over half the total wind capacity. Eleven large wind projects of over 1 MW declared net capacity (2.3 MW rated capacity) won the prized 15 year power purchase contracts in the highly competitive third Scottish Renewables Obligation (SRO-3).

But although the large wind band of SRO-3 may lack diversity, the same cannot be claimed for small wind schemes. After years of lobbying by the British Wind Energy Association's Scottish branch, small wind developers were rewarded for the first time with their own separate band. Seventeen small wind contracts-less than 1 MW DNC each-were shared among 14 companies.

Wind was the cheapest of all the renewable technologies with large wind prices starting from a mere £0.0189/kWh rising to £0.0219/kWh. For small wind, prices range from £0.0263/kWh to £0.0338/kWh. "One has to be amazed at the prices that have been bid," comments Ted Leeming from the British Wind Energy Association. "It shows that wind energy is now cheaper than most other forms of electricity generation in Scotland."

The lion's share of the large wind tranche went to Renewable Energy Systems, the renewables arm of the Sir Robert McAlpine construction group. RES scooped seven contracts for 93 MW-over 60% of large wind capacity. "We tightened our belt one notch and decided to bid aggressively," says Chris Shears from RES explaining the company's success. "Having said that, we are confident we can build at those prices. One of the key factors is the excellent wind resource in Scotland." Some developers believe, however, that RES's projects are not among the windiest sites bid into SRO, and that therefore the key to the company's success must be its sources of finance. Shears counters: "We will be going to the market and we feel that with our experience we can offer a good package to potential investors."

He claims that the company hopes to push forward with its projects without delay. One of its schemes-at Dun Law in the Borders-already has planning consent and the company's priority is to build it this year. It also hopes to see two or three more schemes through the planning process before the end of the year. "We have had very good feedback from various authorities so far in all the areas, and if a modicum of balance is applied under the planning system, then we have a good chance of success," says Shears. He points out that RES is keen to maximise the Scottish content of its projects and will be conducting most of its development from the company's Glasgow office.

Japan and Denmark

Three contracts went to M&N Wind Power, a joint venture between Danish turbine manufacturer NEG Micon and Nichimen, a Japanese finance house. According to M&N's Chris Morris, the company's contracts represent a 100% success rate for its Scottish bids. He adds, however, that before M&N makes a move to develop its three sites, it is "reviewing the situation in the UK," particularly in the light of difficulties in gaining planning consent in Britain. Despite its UK base, M&N is more active overseas, particularly the US, "So it is also a case of what resources we have at the moment to develop these Scottish sites," explains Morris.

The third company successful in the large wind category of SRO-3 is Arnish Electric, which gained one contract for 10.5 MW on the Hebridean island of Lewis. This is the only large wind scheme not located on mainland Scotland. Arnish also won a contract in the small wind band for another project on Lewis. One of Arnish's directors is Peter Crone from Farm Energy-a small Devon based consultancy which was successful in helping several small projects secure contracts under the last round of the Non-Fossil Fuel Obligation in England and Wales. Crone is also involved with Longearth Ltd, which won a contract for a scheme on Orkney.

The only other company in the small wind band to come away from SRO-3 with more than one contract is small Cornish renewable developer Atlantic Energy with four projects in the far north of Scotland. The Scottish isles feature more prominently than in any previous round of SRO, with one large wind project and nine small schemes-more than half the small wind band-dispersed between Orkney, Shetland, Lewis and Tiree.

The next-and probably the biggest-hurdle for most of the schemes will be gaining planning consent. Scottish business and industry minister Lord Macdonald admits that a proportion of the projects will not come to fruition, mostly because of failure at the planning level. Nonetheless, Robert Forrest of consultant and developer Energy Unlimited, which secured a small wind contract, is optimistic. He points out that to date only one wind project has been turned down in Scotland. Moreover, several of the small wind schemes have so far been favourably received by local communities.

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