The time for complaining is over; now is the time for delivery. This was the message that came over loud and clear at the UK's annual wind power conference in July. Indeed, the conference theme "Build and Deliver" became almost a rallying cry throughout the 26th gathering of industry members hosted by the British Wind Energy Association (BWEA), held in Manchester's International Conference Centre.
With a remarkable degree of consensus on renewables policy expressed by energy spokesmen for the UK's three main political parties, Britain's wind community was urged by speaker after speaker to capitalise on the most supportive climate for UK renewables ever and build more megawatts of wind. A consensus-building session with the spokesmen set the mostly upbeat tone for the conference. A commitment by the Conservative shadow energy minister, Laurence Robertson, to retain the Renewables Obligation (RO) was welcomed by many. Tony White from Climate Change Capital pointed out that cross party support for the RO -- the UK government's chief support measure for renewables -- is a key requirement for financiers looking to invest in the sector. "This is the most important policy statement I've heard this year," he commented.
In the political session, knowledgeably chaired by well-known broadcaster Jonathan Dimbleby, all three politicians saw wind as currently the most viable renewable energy option. Wind is a "very important technology" for the next 15 to 20 years, said Liberal Democrat Andrew Stunell. He urged the industry to "get those turbines spinning as soon as you can" until additional renewable technologies including wave and tidal can be deployed. Robertson said that "wind will and should play a significant part in our energy supplies." But he seemed far from totally convinced by his own rhetoric, stressing that "we should not deny the problems that exist, such as its "high cost," its variable supply, and "alleged unsightliness." He wants to see more emphasis on energy efficiency. "Energy saving must become a moral crusade, not just an exercise in saving money," he said.
In a veiled reference to the Conservatives, energy minister Stephen Timms from the ruling Labour party commented that "some people" accuse the government of being obsessed with wind. "It seems that those people are strongly in support of renewable energy with the exception of those forms that are currently economically viable." The reality has to be faced, he said, that wave and tidal are not yet available for deployment at scale. "There is no impact-free route to deliver the multi-billion pound investment program we need to make renewables a substantial contributor to energy supply." Timms sees wind meeting 7%-8% of electricity supply by 2010.
The politicians agreed there could and should be a cross-party consensus on renewable energy. Robertson lamented that energy had been politicised in the past. "Security of supply is a big issue; this is something that should unite us. Even more important is the emissions issue," he said. "Survival of the planet has to be the most important political issue on the agenda."
The conference heard that the usual obstacles to wind energy in Britain -- the archaic physical planning system and the need to revise the grid infrastructure -- still threaten to slow wind's progress. But in the last six months, another issue has emerged, according to BWEA chief executive Marcus Rand: the politicisation of wind. Continuous attacks on wind, highlighted by the media, have put the industry and the government on the back foot, he said. "Of most concern is the impact that this is having on the national politics of wind energy and life on the ground for our developers." The opposition Conservative party is taking an increasingly antagonistic attitude to wind, he pointed out. And locally elected authorities are taking longer to decide whether or not to grant consent to projects. The planning system is fundamental to creating a stable market that can deliver new jobs and new investment, he said. "And, of course, we know that delivering jobs and economic benefits is key -- especially with an election in sight."
Rand called for immediate action. First the industry must build out the 2000 MW of projects which already have siting consent so that it can demonstrate that wind can deliver and is not the unsightly waste of time and money so often claimed in the media. "And secondly we need to re-build the political and public consensus around our industry," he said. "Our greatest enemy is not those that line up to attack us but our own complacency. Danger lies in a failure to act and in sitting back and taking our support and future expansion for granted."
He announced two new BWEA campaigns, one aimed at restoring the political consensus around wind and the other to mobilise public support. "Wind is blazing a trail now for other renewables. If wind fails to deliver over the next few years then the whole renewable journey will be put in question. It will hit a roadblock," he said. If that happens, conventional energy technologies, especially nuclear, will be ready to fill the gap, he warned.
Taking up Rand's call to action, Chris Shears from international project developer Renewable Energy Systems agreed that the wind community had been complacent in believing that its green credentials speak for themselves. It is time to get its messages across to the public and politicians at a local and national level, he said. "If that requires far greater resources than we have at the moment, then we as an industry have to decide how to bring those resources to bear." The industry should not shy away from the wider energy discussion: "Where would you build a new nuclear power station?" he asked. "We can be confident -- wind is groovy, it's great, it's sexy; we don't make enough of that. We tend to be apologetic about what we're trying to do," he said. "If we don't crack this in the next three years and get our messages across we will be struggling." Meantime, developers must build their consented capacity. "It is the only way to deliver credibility. Our strongest asset is our operating wind farms."
The imperative to build and deliver was echoed in the finance session. "For the market to become truly established in the UK, the next 12 to 18 months are critical in terms of getting megawatts installed," said Nick Gardiner from Fortis Bank. "Everyone is saying the right things about the prospects for the UK wind sector," he said. However, the success of the sector is assessed "not by the quality of the conversations we have had but by the deals we have been able to do." If the wind industry does not build and deliver, banks will turn to other sectors that are more readily accessible, he warned.
Gardiner is convinced that debt finance will be available to offshore wind farms, adding: "Fortis Bank is confident that an offshore wind farm will be financed on a stand-alone basis, including construction, within the next 12 months." The large sizes of projects, and large capital requirements are attracting new banks into the sector. But there is still nowhere enough funding available to meet the £1 billion a year of bank investment needed to meet the 2010 target. "There are not enough banks playing in this game. There are only six or seven banks here at this conference, which is a shocking turnout," he said.
Private equity is interested in renewables, but the returns on offer will have to match those from alternative types of investment if institutional investors are to play in the market, said Tom Murley from HgCapital. The industry must work to change the public and media perception of wind and to emphasise the relative economics of renewables and conventional energy sources, he urged. "Right now you are losing the battle for hearts and minds," he said. "There is a perception among some investors that renewables cost too much and can't survive without subsidies. You have to overcome that."
"To get bank finance you need a long term power purchase contract," pointed out Climate Change Capital's White. Long term contracts are being offered by electricity suppliers at around the £50-£55/MWh level, he said. Yet renewables contracts today are worth around £80/MWh. "You can see who is making the money in this green business at the moment," he said. The difference between the prices is due to uncertainty about the future value of the renewables obligation certificate (ROC). White explained that a contract price of £50/MWh rules out offshore wind, energy crops and wave and tidal.
The government's forthcoming review of the renewables obligation needs to address this shortcoming and anticipate the needs of emerging technologies, said White. "It seems to me we are not going to have one colour for the ROC; we are going to have to have a support mechanism that recognises these different types of technologies at different times."
Keep the RO boat steady
The main body of conference opinion, however, supported a minimum of change to the RO. "What we all crave is consistency," said Murley. "If you find something, stay with, we'll finance around it. I'm happy with it the way it is." Referring to the all important task of securing a power purchase agreement (PPA) Andrew Lee from Augusta Finance added: You need stability to underpin the PPA so you can get something which is attractive and related to the market, but the least change the better."
Maintaining a positive long term investment climate was seen as vital by Geróid Lane from energy giant Centrica. "We have seen some tinkering with the RO which has already created some question marks as to the stability of the regime," he said. "We need to see this [government] review conducted in a spirit of not tampering with the obligation so any changes introduced are absolutely necessary and are not diluting the long term investment criteria."
Need for new wires
Transmission and network issues were perhaps the most thorny problems aired at the conference. Delays in installing new wires to take the increased power flows from renewables could seriously hamper wind deployment, said Nick Goodall from the Electricity Networks Association in a pessimistic presentation. "You think you've got planning problems? The last major bit of wire that was built took ten years to get through planning," he said. "It is going to be much more challenging to get pylons put in the ground than it is to get wind farms built."
Goodall was even gloomier about the prospects for the infrastructure needed to connect the second larger round of UK offshore projects. There is still no regulatory framework for an offshore grid, no real idea of what the optimised design might look like and no network operator expected to be appointed before 2006. "If we don't have the operator in place until 2006, I don't see how you're going to have generation (from round two projects) from 2008." Goodall was chief executive of BWEA prior to Rand.
The "miserable whinging" in the session on grids was challenged by Andrew Garrad of international consultants Garrad Hassan. "I've been there before. What we saw in that grid session is exactly what killed the UK manufacturing industry," he said. While the British were making models of wind turbines and looking at all the things that might happen, the Danes were making windmills. "Look at who's making windmills now." Enthusiastic applause greeted his statement: "We shouldn't be messing about, we should be doing it and finding out what happens." Garrad's conclusion summed up the mood of the conference: "Don't let's say why we can't do it; let's say how we can do it."