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United Kingdom

Utility attitudes changing

All the large British utilities have plans to invest in wind farms according to a report by LEK Consulting, Investor Perspectives on Renewable Power in the UK. It draws on interviews with developers, the financial community and all the major utilities.

Wind is the only technology that can contribute meaningfully to meeting the Renewables Obligation (RO) target of 10.4% by 2010-11, most believe. "We have significant plans for investment, and will focus on wind, but not other technologies," was a typical large utility view.

The study's findings support the government's five year extension and increase in the Renewables Obligation after 2010-11, which was announced on the same day the report was released (main story). Interviewed before the RO extension, nobody thought the 2010 target could be met. "We need certainty beyond 2010. At the moment, we can only project ROC value until that time -- the result is that the projected returns don't justify investment in new facilities beyond 2005, even for well-sited onshore wind," a large utility says in the report.

While independent developers have been struggling to get power purchase agreements for longer than five to seven years, some utilities have not been interested in signing agreements or buying renewables obligation certificates (ROCs). "We prefer to pay the buy out price and wait for our own capacity to come on stream over the next three years," says one. Other utilities are more interested in buying up projects or developing their own wind capacity through joint ventures than buying ROCs.

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