United Kingdom

United Kingdom

A positive year of lack lustre growth -- Lots of optimism in UK

Yet another year has passed where the anticipated rush to develop wind projects in the UK failed to materialise on the scale expected. The British Wind Energy Association (BWEA) reports a year of "solid growth" for 2001, but the 66 MW of new wind capacity was only marginally more than in 2000. It brings total installed capacity in the country to around 484 MW.The brighter prospects for wind in 2002 will also be reflected in a higher rate of build. According to BWEA, nearly 200 MW of wind is confirmed for construction, which will increase UK installed capacity by 40%.

With the Renewables Obligation set to come into force next month, the price being paid for wind is on the rise, giving the industry plenty to smile about

Yet another year has passed where the anticipated rush to develop wind projects in the UK failed to materialise on the scale expected. The British Wind Energy Association (BWEA) reports a year of "solid growth" for 2001, but the 66 MW of new wind capacity was only marginally more than in 2000. It brings total installed capacity in the country to around 484 MW giving an annual electricity production of some 1.27 TWh-around 0.37% of UK demand.

The average size of project crept up to over 8 MW -- thanks to two large Scottish projects of 15 MW and 30 MW. Indeed, for the fourth year in succession, Scotland is the only region of the UK where projects above 10 MW are being built. The largest project in the rest of the country was National Wind Power's wind farm at Bears Down, Cornwall -- at 9.6 MW a significant size for England and Wales. The trend for small projects south of the border with Scotland is about to change, however. Government consent in 2001 for a 58.5 MW project for Cefn Croes in Ceredigion, Wales, signals that the planning deadlock on large wind farms appears to be easing.

Altogether, nine new British projects totalling 195 MW received consent during the year. But in future a higher proportion of wind projects can be expected to come through the planning system successfully after the government introduced in December 2001 siting flexibility for non-fossil fuel obligation (NFFO) contracts, allowing projects that are unable to gain planning permission to be transferred to an alternative site. This could free some 350 MW of non-commissioned NFFO projects which are currently blocked by the planning system.

Most of the 2001 projects were developed under NFFO, with 15 year power purchase contracts. An exception was Ecotricity's merchant wind turbine which provides 33% of the power to Sainsbury's distribution centre at East Kilbride. Ecotricity owns and operates the wind turbine on Sainsbury's site, and sells the output without a premium to the supermarket chain.

Large scale offshore wind moved a step closer for the UK during 2001 when in January 18 developers were granted site leases by the Crown Estate -- owner of most of Britain's coastal waters -- to develop offshore wind farms, each of up to 30 turbines. This allowed developers to begin site exploration and to work towards gaining consents for their sites.

LEVY and NETA

The climate for renewable energy in the UK -- and in particular for wind -- was influenced by two separate developments during the year. In March new electricity trading arrangements (NETA) imposed an immediate cost burden on wind energy by heavily penalising intermittent generation. More positive for wind is the tax on businesses' use of energy -- the climate change levy (CCL) -- introduced in April. Electricity from renewables is exempted from the £0.0043/kWh levy, and has accelerated the switch to green supplies of electricity by many companies and in particular local authorities throughout the country.

But far outweighing the effects of either NETA or the CCL will be introduction of the Renewables Obligation, coming into force in April. This legislation requires electricity suppliers to buy a proportion of their power from renewables, rising to 10% by 2010. Any suppliers who fail to source sufficient electricity from renewables will have to pay to "buy out" of their obligation. The buy out price of £0.03/kWh on top of the market price for electricity is effectively setting the price for renewable energy in Britain, enabling renewable generators to command more for their output than they have for years. Optimism is high among most in the wind energy community.

The brighter prospects for wind in 2002 will also be reflected in a higher rate of build. According to BWEA, nearly 200 MW of wind is confirmed for construction, which will increase UK installed capacity by 40%; a further 110 MW is likely to begin construction during 2002 making it the UK's most successful year ever.

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