United Kingdom

United Kingdom

Government opens competitive bidding

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Renewable energy developers have been invited to begin bidding into the UK's latest round of support for new renewable energy projects. Onshore wind energy, landfill gas, municipal and industrial waste -- with and without combined heat and power -- and small scale hydro will be included in the fifth round of the Non-Fossil Fuel Obligation (NFFO-5). But offshore wind is to be excluded from the new order, announced on November 25 by energy minister John Battle.

NFFO-5 is the first step in the new government's programme of renewables support while it undertakes an extensive review of policy to find the best way to meet its target of 10% of the UK's electricity from renewable sources of energy by 2010. According to European Commission statistics, the country is at the bottom of the league table when it comes to meeting electricity needs from renewable sources of energy. Of the 15 member states of the EU, only the UK generates less than 1% of its electricity from renewables.

The size of the NFFO-5 order will depend on the cost and quality of the bids for contracts by renewable energy developers, says Battle. The new round of bidding is likely to be highly competitive and lead to further reductions in the price of electricity from renewables. But he does not expect prices to fall as rapidly as under recent orders.

Small wind schemes will be afforded some protection against heavy competition from larger wind farms. This will be through a separate "sub-band" ' for small projects, the cut off point falling at around 1 MW declared net capacity (DNC) or less. For the first time, though, the government has specified that wind plants must be sited on land. This has never been spelt out before, but the Department of Trade and Industry (DTI) was as surprised as many industry insiders when in NFFO-4 a couple of offshore projects successfully competed for contracts alongside onshore schemes.

NFFO-5 will run from late 1998 to 2018. The 12 regional electricity companies (RECs) in England and Wales will offer premium payments to successful bidders for 15 years. A lead-in period of up to five years will allow for development and commissioning.

Battle warns developers that he expects projects to show high standards of environmental performance. Developers must consult widely on their proposals so that projects meet the concerns of local communities. To increase diversity he will, if needed, limit the number of projects per developer or the capacity of individual schemes.

NFFO-5 is certain to lead to a massive increase in the number of wind turbines in the UK, says the British Wind Energy Association (BWEA). It points out that the UK's 739 turbines currently generate less than one tenth of Europe's wind electricity despite the best wind resource of any European country.

Battle's proposals follow months of consultations with the renewable energy industry on the structure of NFFO-5. Summarising the main messages from the consultation exercise, the DTI claims in its Renewable Energy Bulletin that it was urged to include in the order cheaper technologies, such as onshore wind, landfill gas, hydro and energy from waste. On the other hand, it says that trade groups promoting the more expensive renewables -- including offshore wind -- favoured a delay to give developers time to devise soundly based projects with real prospects of success. This is borne out by Gaynor Hartnell from the BWEA who confirms that the association asked the government to delay its support for offshore wind and to separate it from NFFO-5. "The timing of NFFO-5 would have been impossible for offshore developers to meet," she says.

Hartnell is optimistic that provision for offshore development will be announced when the government reveals the results of its renewable energy policy review. Battle says that to meet 10% of the UK's electricity from renewables by 2010 will almost certainly require technologies such as offshore wind energy to be brought forward, as well as those supported under NFFO-5.

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