With international energy groups Shell, RWE, Enel and GE explaining from the same platform why they are backing wind and renewables, it was apparent that the sector is becoming big business. GE Energy's Steve Zwolinski summed it up. There are still some questions -- particularly over green credits, support, grid infrastructure and energy storage, he said. "At the end of the day though, there are so many positive strong accelerating underlying factors. The technology is ready and we are betting our money on this segment because we know it's going to be a very strong segment, not only this decade, but the next." The forum was one of a series organised by Euromoney Energy Events.
Amid the talk of renewable energy market drivers, analysis of risks, and financing requirements, the "softer" issue of community acceptability of wind stations was raised, almost apologetically, by Peter Calliafas of Barclays Bank. "A lot of people ignore this because they see it as a softer risk," he said. "But I put it right up on the project development agenda." Engagement with the community is critical to the success of a project, he said. Otherwise, objections ensue, leading to all-out environmental campaigns in the local media which logic and serious argument cannot budge. "Once an emotional sentiment has been raised it is extremely difficult to counter it."
Kevin McCullough from npower renewables commented that the industry needs to get a clear message across to counter anti-wind publicity. "If we seriously don't take a stand to look at the generation mix in this country then we're in serious trouble." The sustainable energy debate should embrace both renewables and nuclear, he said. "And on a more micro scale, it is not about onshore versus offshore; we need both," he said. McCullough praised the UK's Renewables Obligation (RO) legislation, which he called "one of the few clean breaths of fresh air that the green energy sector has seen in a long while." It is not perfect, he said, but it is working.
Even under the RO, however, building npower's wind stations in round one of the British offshore program was not easy -- and not because of the technology, McCullough said. "The challenge has been in making the renewable obligation stretch to make offshore viable." Npower's round two Gwynt y Mor project costing a minimum £750 million will be even more challenging, he warned. "There are only very few of us who can take fractions of those projects on balance sheet." Offshore wind is about one-third more expensive than onshore due to the lack of grid infrastructure, the extra steel needed for towers and monopiles, the effect of exchange rates and consolidation among turbine suppliers stifling competition, he claimed. "No rocket science in terms of technology; it just costs more money."
Round one projects were made possible through government capital grants in addition to the RO, said McCullough. He warned that the forthcoming government review of the RO would have to ensure a mechanism robust enough to allow round two offshore projects to proceed.
The conference witnessed new UK energy minister Mike O'Brien's first major speech. The consensus among his audience was that he said the right things. O'Brien stressed the government's commitment to renewable energy. "We are willing to engage with the investment community, to listen to your concerns, to try to create a new market to enable the expansion of renewables." He highlighted wind as "the form of renewable energy with the best immediate prospects for expansion."
When quizzed about the opposition Conservative party's increasing antagonism towards wind, O'Brien dismissed it as "political abrasion" which looks more controversial than it actually is. "You've got to look at the context we are in at the moment. We are likely to have a general election in the next 18 months, probably earlier rather than later; that puts a more political edge to some of the debate on this area. The Conservatives have looked at onshore wind energy and decided there is a bit of political advantage to be gained," he said. "The bits of abrasion we see over planning issues in relation to onshore wind technology are bits of abrasion in a wider debate."
He stressed the broader consensus on environmental issues among the parties. "My message to you is don't focus on the small political differences, look at the wider political consensus which is in favour of a great emphasis on renewables. This is an area where whatever complexion of government you have, you are going to get a government supporting the development of renewables."
O'Brien takes over the Department of Trade and Industry's energy portfolio after former energy minister Stephen Timms was promoted to the Treasury in Prime Minister Tony Blair's government reshuffle in September. Timms had proved to be a staunch wind industry ally.