United Kingdom

United Kingdom

FIRST BRITISH BROKER OF RENEWABLE ENERGY; Clean power trading outside NFFO protection

The Renewable Energy Company is proving that electricity from renewable generation can be bought and sold outside the Non Fossil Fuel Obligation (NFFO). The company's sales of green electricity are currently restricted to customer's of 100 kW and above. However, in 1998 domestic consumers will be free to choose their supplier too.

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A small Gloucestershire company has become the first organisation in Britain to trade renewable energy direct to local customers. The Renewable Energy Company, based in Stroud in the west of England, is proving that electricity from renewable generation can be bought and sold outside the NonFossil Fuel Obligation (NFFO) -- Britain's system of support for renewables. Significantly the venture is also proving that in some circumstances renewables can compete on the market without subsidies.

The start of the company's brokerage business is timely with the final step towards full liberalisation of Britain's electricity market looming. In 1998 domestic consumers -- currently the regional electricity companies' franchise market -- will be open to competition. For renewable generators whose output is not tied to a NFFO premium priced power purchase contract, this spells an opportunity to sell direct to the more environmentally aware customer. Nineteen ninety-eight also sees the expiry of contracts awarded to renewable generators under the first two NFFO rounds, allowing a further 150 MW to be traded.

Second tier supplier

Until this domestic market is freed to competition, the Renewable Energy Company has to confine its marketing efforts to customers of 100 kW and above. The company has been operating only since the beginning of the year. It was set up after a £26,000 study concluded the venture would be feasible. The study was funded jointly by the Department of Trade and Industry through the Energy Technology Support Unit (ETSU), its research arm, and Western Renewables -- sister company to the Renewable Energy Company. It looked into existing and potential renewable energy sources in Gloucestershire and then assessed the economic viability of setting up a company to act as a second tier electricity supplier -- buying power from renewable schemes and selling to customers using the local grid network.

Now, five months since it began trading, the Renewable Energy Company is selling electricity to five Gloucestershire companies with more customers in the pipeline. It expects to be trading around 8 MW of electricity by the end of the year. The company's Karen Lane stresses the local nature of its operation. "It is all about generating local electricity and supplying to local people," she says. Later, however, the Renewable Energy Company plans to expand to other areas of the country -- but still using locally generated renewable sources. None of its electricity will come from NFFO supported schemes. "The aim of the company from the beginning has been to sell renewable energy without a price premium," she explains.

Today the Renewable Energy Company is run by Karen Lane and Martin Alder. They had help in getting it off the ground from Dale Vince of Enercon who advised on use of system issues and wind economics. At present the company is buying output exclusively from two landfill gas sites. However, it also plans to trade electricity from wind and hydro sources. Bringing wind into the mix of technologies it offers to customers is a priority for Lane and Alder who teamed up originally to develop wind energy. "We are concerned primarily with wind turbines and finding a way of bringing them to the market," says Lane.

They first set up Western Windpower -- a company that plans to erect an Enercon wind turbine at Nympsfield, Gloucestershire. This project has had a bumpy ride so far. It was refused planning consent in March and Western Windpower is now resubmitting its application. It already has permission for two smaller turbines on the site but prefers to hold out for consent to put up the 500 kW unit. Whether or not the local authority looks favourably on the new application, Western Windpower is determined to see wind generation on the site. It will content itself with building the smaller turbines if the larger machine is not allowed.

Lane believes the Nympsfield project will pave the way for more wind energy in the area. Indeed, the Renewable Energy Company has plans to finance its own wind project, using yet another Enercon turbine. "The profits that the Renewable Energy Company makes will be reinvested in renewable energy projects," she says. "Wind is the most immediately feasible technology." With its output consumed locally and without the obvious subsidies of the NFFO, she envisages the new scheme will not run into the degree of hostility encountered by the Nympsfield project.

Moreover, once Western Windpower's turbine is operational, local people will be able to judge its impact for themselves. Many of the fears whipped up by the protest movement about noise and visual impact will be proven to be greatly exaggerated, she claims. The company hopes to add wind to its energy mix within a couple of years. "It depends how the marketing goes. It is demand driven."

She points out, however, that the first step for the company is to expand its customer base. "A lot of people are becoming aware of the problems of electricity from fossil fuels." Nevertheless they are not yet queueing up to purchase electricity at higher prices. "At the moment there are only a few people prepared to pay a little bit more," she concedes.

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