Scotland continues to accommodate bigger projects and most of the new installed capacity, with nine projects giving nearly a 60% share of the UK total. These include the UK's largest wind farms to date: Scottish and Southern Energy's 120 MW Hadyard Hill development, the first in Britain with an installed capacity greater than 100 MW; and Npower Renewables' 92 MW Farr project. By contrast, the nine projects completed in England -- which included one offshore wind farm -- accounted for just 30% of new capacity.
Manufacturer Siemens built on 2005's strong showing and scooped an impressive 50% of new turbine capacity last year -- 6.5% more than in the previous year. Vestas held its position and took 28%, with Repower and Enercon improving on last year's performances taking 15% and 7%, respectively. Gamesa dropped out of the running. Manufacturing activity in the UK appeared to drop even further during 2006 from its already low base: Vestas scaled back its UK operation at Campbelltown on Kintyre and Britain's only turbine tower manufacturer, Camcal, entered receivership.
The growth in wind installation looks set to continue, albeit with a slowdown in 2007. By early February, 75 MW had been commissioned with 950 MW in construction -- both on land and offshore -- but only around 50% of this is likely to be completed during 2007. The build rate is expected to accelerate from 2008. An unprecedented 2120 MW received consent in 2006; added to existing consents, this brings total permitted projects to over 4000 MW. A proportion of this capacity, however, is awaiting grid upgrades in Scotland, some of which could take until 2016 to be built unless the electricity market regulator, grid operator and industry can agree a fix in the meantime (Windpower Monthly, February 2007).
Driving the market is the Renewables Obligation (RO), introduced in 2002. It requires electricity retailers to acquire a rising proportion of their electricity from renewables through the purchase of Renewables Obligation Certificates (ROCs) from green power generators. Failure to make the required purchases triggers payment of a penalty to "buy out" of all or part of their obligation.
The RO's failure to deliver renewable energy as cheaply as it should do and its inability to bring forward more expensive technologies led the government, in its much trumpeted Energy Review last year, to propose changes to the mechanism. The Department of Trade and Industry (DTI) is currently consulting on a contentious proposal to introduce "banding." This will allow the less commercial renewables -- offshore wind, purpose-built biomass and marine technologies -- more than one ROC per megawatt hour, while cheaper technologies, such as co-firing of biomass in conventional power stations and, perhaps later, onshore wind will receive less than one ROC/MWh.
But the high cost to the consumer of the RO -- and of the government's proposed changes -- are still causing concern in some quarters. The energy market regulator, Ofgem, has proposed scrapping the mechanism and replacing it with centrally controlled competitive bidding for power purchase contracts (Windpower Monthly, February 2007). Meantime, while the government reviews its options, the risk of a market hiatus exists.
This is making wind developers think twice before spending money on new projects, believes Richard Mardon from Your Energy, which built the largest onshore project completed in England last year, a 20 MW development in Northamptonshire, the county's first wind farm. "For our existing portfolio we are confident that any changes that are introduced will be sufficiently far out in the future. And the grandfathering principle has been talked about so that our existing projects should be safeguarded," he says. "But we are very cautious about looking at new projects." Your Energy is a small independent developer backed by Mistral Invest, the wind investment arm of international shipping group CNC.
Mardon points out that the 2006 Energy Review coincided with a drop in the number of consent applications lodged by wind developers. Applications for onshore wind capacity were down almost 50% on 2005 and applications for large projects of 50 MW and over were the lowest since 2001. "A lot of developers are cautious about their strategy beyond three years with these market dynamics going on." This drop in applications is partly because the best sites have gone, particularly in Scotland, he says. But the continued uncertainty has been a contributory factor.
Mardon, like many developers, is concerned about the effect of any banding changes on onshore wind. Some generators in Scotland may be over-compensated under the current arrangements but many sites in England are more marginal in terms of wind resource and will not be developed if there is a drop in the level of support under the RO, he says. "Plus turbine prices have gone up 20-30% and it is costing much more to develop projects in the first place," he says.
Grid and permit barriers
Although the RO has so far stimulated huge interest in developing wind, project developers continue to be frustrated not only by delays in obtaining grid connections but also in securing decisions from permitting authorities. Over 11,000 MW of wind projects are currently stuck in the planning system awaiting determination. Half that volume is made up of onshore projects of 50 MW and more that require "Section 36" consent from either the DTI in England and Wales or the Scottish Executive in Scotland. The worst offender for delaying projects is the Scottish Executive, where 90% of the Section 36 applications are lodged, for a grand total of nearly 5000 MW.
Moreover, a worrying trend to emerge in 2006 was the lower success rate of projects in the appeals process. More than 70% of planning inquiries resulted in the appeal against refusal of the wind farm being dismissed.