The answer, my friend, is blowing in the wind
The answer is blowing in the wind
Bob Dylan
Following recent articles on CO2 Storage and Gas Storage, I thought I might delve into the issues around Wind Power. However, noting the recent pronouncements of our leader (Gordon Brown on 26th June 2008) that:
“Central to the government's consultation on how to meet its renewable energy targets and cut carbon emissions is the call for 4000 more wind turbines to be built onshore and 3000 more to be erected at sea”,
I quickly recognised that I was stepping outside my area of competence as a humble geoscientist and therefore asked my colleague Stephen Ainger, who is the CEO of Partnership for Renewables, to write the introductory article that you will find below.
I hope that this helps those OilVoice readers who would like to know more about Wind Power to get started. For anybody then wishing to begin to pursue the topic of Wind Power in more depth, I’d direct them to click here where there’s quite a comprehensive review of the issues; and of course Partnership for Renewables are a good contact for anybody interested in smaller scale developments.
And I guess the UK Government must have a web-site somewhere that talks about Wind!
Winds of Change
Ten years is a long time in politics.
When the Government conducted its energy reviews back in 2000/1 Global Warming was not even on the agenda. What was known however was that the decline of North Sea oil was evident, the rest of Europe’s Energy market had not been liberalised and the UK were at the end of a long import energy supply chain with by far the lowest energy storage facilities in Europe. The government’s position at the time was that Russia had not let the UK or Europe down during the Cold War and that it saw no reason for that to change. This point of view, combined with Ofgem’s focus on keeping energy prices low, meant that the stage was set for long term decisions on the UK Energy Strategy to be deferred.
Some seven years later the recent energy White Paper (ref) features global warming and security of supply almost equally. To quote the White Paper:
“The UK’s reserves of oil and gas are declining. While significant amounts still remain in the North Sea, production has hit its peak and is now falling. We will make the most of the reserves we have, but as our economy grows, we will become increasingly dependent on imports in a world where supplies are concentrated in less stable regions……..Our aim will be to ensure that companies have a wide range of low carbon options available so we can retain a diverse energy mix, which is good for our security of supply, and will help us to become a low carbon economy”.
The white paper goes on to state what the government considers are the main drivers for renewables, the context for the challenge:
• “the growing evidence of the impact of climate change, and wider international recognition that there needs to be a concerted global effort to cut greenhouse gas emissions, especially carbon dioxide;
• rising fossil fuel prices and slower than expected liberalisation of EU energy markets at a time when the UK is increasingly relying on imported energy;
• heightened awareness of the risks arising from the concentration of the world’s remaining oil and gas reserves in fewer regions around the world, namely the Middle East and North Africa, and Russia and Central Asia;
• in the UK, the need for companies to make substantial new investments in power stations, the electricity grid, and gas infrastructure”
This is a context that does not include any requirement to minimise the number of nuclear power plants or consider their cost for, for the first time since the industrial revolution, the UK will depend on energy imports. A rough estimate of the impact on the balance of payments is of the order of $100bn a year.
This kind of thinking has, in turn, translated into legally binding carbon targets for the UK economy, progressively reducing emissions through domestic and international action, leading to at least a 60% reduction in carbon dioxide emissions by 2050, and a 26-32% reduction by 2020, against a 1990 baseline.
Renewables, of course, are recognised as being key to the strategy to tackle climate change with targets to grow 20 - 35% of electricity supplies from renewables by 2020 (35% of the UK power requirement is approximately 33GW). When considering these levels it should be noted that 20% of renewable power generation is the limit beyond which additional base load plant would be required to balance supply.
Of all the renewable technologies available wind is arguably the only one in the UK with both the potential scale and the available technology to make a material impact, certainly by 2015. Even so wind is not competitive with gas or coal without price support through the Renewables Obligation Certificate (ROC).
The main mechanism for incentivising the Renewables growth is the ROC.
Again quoting from the White Paper:
“The ROC has been successful in stimulating investment in renewable energy projects. It does this by placing an Obligation on licensed electricity suppliers to source an increasing proportion of their electricity sales from renewable sources or to pay a penalty (the buy-out price). The RO’s aim is to provide a framework of financial incentives to invest in renewables, with the long-term goal of supporting the transition of renewables into the mainstream of the UK’s competitive electricity market. The level of the Obligation is currently set to increase in annual steps from 7.9% in 2007/08 to 15.4% by 2015, and to remain at that level until 2027 when the mechanism will end. Generators receive an RO Certificate (ROC) for each 1MWh of renewable electricity they generate. These are sold to electricity suppliers, allowing them to demonstrate how much renewable generation they have sourced. The RO was designed to bring forward the most cost-effective technologies first and it has been very successful in doing this”.
THE RENEWABLES OBLIGATION
The buy-out price is the fixed penalty that an energy supplier pays for each MWh that it falls short of its obligation. The buy-out price is linked to the Retail Price Index (RPI) and for 20007/08 the price is £34.30 per MWh. The suppliers pay this money into an account administered by Ofgem (the Buy-out Fund) and each year the accumulated Fund is shared among those suppliers who have presented RO Certificates (ROCs). The combination of the buy-out price and the extent to which suppliers have fallen short of their obligations determines the nominal value of a ROC and the total support available for each MWh of renewable electricity under the RO. When the Obligation as a percentage of total electricity supplied is greater than the share of actual renewable generation, the value of a ROC will be by definition greater than the buy-out price”
It is recognised that if the UK wants to move significantly beyond 10% renewables, then the UK needs to bring forward renewable technologies other than onshore wind, particularly offshore wind and biomass. To encourage investment in these technologies, as well as continuing investment in onshore wind and other more developed sources of renewables generation, appropriate levels of support, reflecting the development and technology risks and the costs of each technology are being introduced by the Government through ROC banding which for example aims to give more than a single ROC per MW to offshore wind.
Given the goals of renewable electricity generation in the UK, the RO and other mechanisms are projected to provide around £1billion of annual support for deployment of renewable electricity in 2010, rising to around £2billion of annual support in 2020.
So what is the wind capacity on the ground? It has taken 14 years to reach 1GW and only a further 20 months to reach 2GW making the UK one of only eight countries in the world to have achieved this level.
To date some:
0.4GW offshore and 2.1GW onshore are operational.
0.6GW offshore and 0.9GW onshore are under construction.
3.5GW onshore and 2.6GW offshore are consented
6.5GW onshore and 2.4GW offshore are in planning.
Thus around 19GW are therefore in the “mix” of which the majority is in Scotland. As can be seen, almost all the installed capacity is onshore but offshore is developing rapidly and August 2006 saw the first of two 5MW offshore wind turbines installed in the Moray Firth – the furthest from shore and deepest in the water of its kind in the world.
Some would argue that the larger sites onshore have been identified and are already in the planning process which leaves the smaller sites of perhaps less than 20MW remaining.
Partnerships for Renewables (PfR), a company funded by the Carbon Trust and HSBC, is concentrating on developing small scale (2-15MW) wind farms on public sector land. Its first published sites are with Reading University, Oxford City and Southampton City but many more are expected to be announced shortly with other public bodies such as local councils and central government agencies.
Offshore generation is in its early days but costs are still high and, even with the 1.5ROCs per MWH available, it is difficult to make it commercial, as evidenced by Shell’s recent withdrawal from its substantial share in the London Array in the Thames estuary. (The London Array development has the potential to be the largest offshore wind farm in the world, supplying around 1% of the UK's electricity supply equivalent to 750,000 households).
There is much debate in the press about the difficulties of gaining planning consent both on and offshore but it must also be noted that these wind farms may be with us for the long term and we need to make sure that they are built in the right place. In considering planning the issues can be divided between political risks and technical. Technical risks include wind speed, turbulence, whether the turbines can be ‘seen’ by air traffic control, MOD or Civil Aviation Authority radars; do the turbines obstruct any microwave links, what are the environmental issues, is there housing close by?
If security of supply, minimising nuclear power and reducing CO2 to combat global warming are accepted as important goals then the case for substantial amounts of wind power exists and the facilities are here to stay. Power customers will need to accept that power generation will be a lot more local than it has been in the past. The UK is blessed with the wind resource and it up to us to take advantage of the benefits it brings both the UK and our children.
SD Ainger
CEO Partnerships for Renewables
mailto:%0Astephen.ainger@pfr.co.uk
Reference
DTI Meeting the Energy Challenge: A White Paper on Energy, May 2007
Author:
David Bamford
Tuesday, August 26, 2008 17:34