Extracts from the News sections of NATTA's bimonthly journal RENEW, issue 106, March-April 1997.
As with all NATTA publications the views expressed should not be taken to necessarily represent those of all NATTA members, EERU or the Open University.
A massive 843 megawatt allocation has been made under the fourth round of the Non Fossil Fuel Obligation, which required the Regional Electricity Companies to buy in renewably generated power. NFFO-4 is much larger than expected - as a result, according to Minister Richard Page, of the exceptionally low prices of the bids. The average came out at 3.46p/kWh, almost 1p cheaper than for NFFO-3. 'Real Convergence with market prices is clearly within reach' said Page.
In all, 65 new wind projects are included , totalling 340.8 MW Declared Net Capacity, 10.4 MW's of this being for 17 small schemes, with the best receiving a contracted price of only 3.11p/kWh. Landfill gas gets 173.7 MW (70 projects). New entrant waste fired CHP gets 115.3 MW for 10 projects while waste fired fluidised bed combustion gets 126MW (6 projects) at an average price of 2.75 p/kWh. Biomass gasification/pyrolysis gets 67.4 MW (7 projects) at an average price of 5.51p/kWh.
For the DTI's press release see http://www.coi.gov.uk/coi/depts/GTI/coi6569c.ok
The scale of the new NFFO allocation, which was announced in February, took many people by surprise. In the original proposals (see Renew 99) a figure of 500-600MW Declared Net Capacity was used, but in the event NFFO-4 has been set at 843MW - the largest so far. NFFO-3 was only set at 627MW and that was seen as a breakthrough. The process of convergence with the price of conventional fuels seems to have continued. Thus wind projects received 11p/kWh under the NFFO-2, and 4.32p (average) under NFFO-3. Now they were down to an average of 3.53p with the best projects coming in at 3.11p. Waste combustion did even better, with the lowest price coming out at 2.66p/kWh. For comparison, the average pool price for conventional generation is around 2.5p/kWh and the average pool selling price is around 2.6p/kWh.
Not everyone will be happy to see more waste combustion projects supported, but, with the new projects, Combined Heat and Power makes its debut in the NFFO- along with fluidised bed combustion, using waste as a fuel. So at long last there could be some heat production, as well as electricity generation, in the NFFO. And Fluidised bed combustion, with its improved combustion of residues, might be an answer to some of the problems with getting site approval due to local concerns about emissions from waste burning plants.
But the very large wind power commitment, with 48 new wind farms supported, could raise some hackles amongst those opposed to large invasive wind projects.. However it is offset by 17 new 'small wind' projects, some of which could hopefully be locally owned.
The other big news was that biomass gasification projects also seem to be converging. Short Rotation Coppice /wood chip gasification projects received an average price of 8.65p/kWh in NFFO-3 but biomass gasification was down to 5.51p/kWh (average) in NFFO-4. Less surprising was the large 174MW allocation to landfill gas - given its economics . The Governments new Landfill tax has also presumably helped: landfill companies are no doubt seeking new ways to offset the extra cost.
Finally, its good to see small hydro still in there, but photovoltaics still have to make their mark. Maybe in NFFO-5?
| Technology | Contracted Capacity MW DNC |
Number of Projects |
Lowest Price p/kWh |
Average Price p/kWh |
Highest Price p/kWh |
|---|---|---|---|---|---|
| Landfill Gas | 173.7 | 70 | 2.8 | 3.01 | 3.2 |
| Waste-Fired Combined Heat and Power |
115.3 | 10 | 2.79 | 3.23 | 3.4 |
| Waste-Fired Fluidised Bed Combustion |
126.0 | 6 | 2.66 | 2.75 | 2.8 |
| Small Scale Hydro Electricity |
13.3 | 31 | 3.8 | 4.25 | 4.4 |
| Wind Energy larger than 0.768 MW DNC or less |
330.4 | 48 | 3.11 | 3.53 | 3.8 |
| Wind Energy 0.768 MW DNC or less |
10.4 | 17 | 4.09 | 4.57 | 4.95 |
| Anaerobic Digestion of Agricultural Wastes |
6.6 | 6 | 5.1 | 5.17 | 5.2 |
| Biomass Gasification or Pyrolysis |
67.4 | 7 | 5.49 | 5.51 | 5.79 |
| Total *Weighted by capacity |
843.1 | 195 | - | 3.46* | - |
There has been a long gap since the last NFFO order, which was announced in December 1994 (see Renew 93), so in a way NFFO-4 was really only catching up - not least on the price reductions that had occurred due to improved technology and increased operating experience.
Richard Page, the DTI energy minister was clearly convinced that convergence was underway:Over the next few years I expect increasing numbers of renewable energy projects to be developed and be able to generate in the liberalised electricity market without needing support under the NFFO arrangements.
That may not please those who were hoping that the newly emerging 'green electricity' market might be supported, at least initially, by the NFFO, or something similar.
But convergence is clearly underway - and that can't be bad, as long as it doesn't mean invasive siting by poorly thought out projects. Page recognised this problem I expect generators to develop their projects with care and sensitivity and so ensure the long-term prosperity of their industry
The bottom line though is that the UK is at least now beginning to have a reasonable renewable programme, one which, as Page put it, will bring environmental benefits andhelp to secure diversity of energy supplies.
The DTI say that there will be a policy review before NFFO-5. And as with the previous rounds of the NFFO, NFFO-4 contracts will be for 15 years, and the period, which allows developers time to get their projects up and running, will once again be up to 5 years.
The Fourth round of the Non Fossil Fuel Obligation is not only very large, but it is also quite innovative, in that it seems likely to include support for the worlds largest offshore wind farm - with 40 turbines sited 4 miles out from Clacton-on-sea in Essex.
Details of specific allocations under the NFFO-4 have yet to be released, but according to the Independent (12/2/96), the Dutch company Windmaster have obtained NFFO support and hope to complete construction of the £35 m project 'by the end of next year', subject to obtaining the necessary permissions on shipping and fishing issues. Being offshore no conventional planning permission is needed. The sea bed site will have to be rented from the Crown Estate Commissioners, since the Queen owns the sea bed up to 12 miles offshore: however the money will go to the state.
The windfarm will be visible from Clacton and Frinton, but, it is claimed , it will be sufficiently distant so as not to dominate the horizon- and local people will be consulted on, and kept informed of, the plans.
The Independent also reported that there was NFFO support for a smaller offshore windfarm with just two windturbines off Blyth Harbour in Northumbria, which already has a causeway mounted windfarm.
Offshore windfarms are more expensive to construct, so its a little surprising if it does turn out that the large Windmaster scheme has got NFFO support: it would presumably also need other sources of finance- perhaps from the EC? That is possible: after
all the UK has the worlds largest offshore wind resource and wind availability offshore is more consistent. And although it has yet to be put to the test in the UK, there is also less likelihood of public objections.
In the run up to NFFO-4, OFFER, the Office of Electricity Regulation, produced some advice to the DTI, suggesting that an order of around 426MW could be reasonable but that a 745MW NFFO was a possibility. In the event the DTI choose to go beyond that with its 843MW order.
OFFER also produced a report on the much delayed next Scottish Renewable Order, SRO-2.
Pressure has been building up for a final SRO allocation - but so far with no result.
SRO-2 has been set in outline at 70-80MW and there have been 218 applicants, which have been whittled down to 184 -involving 784MW, three quarters being wind projects. The average price was 3.7p/kWh.
OFFER recommended a 75MW programme with 62MW of wind and 15MW of waste combustion, but with hydro excluded on the basis of costs. But OFFER's cost-resource curves for Scotland suggest that there would be 100MW of wind capacity at 3p/kWh and 300MW at 3.5p/kWh, and it could be the DTI will again go for a larger programme.
Over the past year there has been a flurry of backroom meetings by members of the UK renewable energy community on the question of what should follow after the last round of the Non Fossil Fuel Obligation - NFFO5, likely to be set in 1999. A continued NFFO scheme, or something new? And what about R&D?
Gradually some sort of consensus seems to be emerging - at least as to what the key issues and options are - thanks to the work of amongst others the Sustainable Energy Roundtable group convened by the all-party Parliamentary Renewable and Sustainable Energy Group.
Nearly everyone wants a continued and expanded Non-Fossil Fuel Obligation with the fossil fuel levy or something similar. Some want to retain competitive bidding for NFFO contracts, although others argue that this is divisive and wasteful (see Dave Tokeís contribution in Renew 104). But, inevitably, if renewables are to continue to challenge conventional energy options, they will have to become more competitive - and demonstrate that NFFO support can lead them to achieve price convergence.
At last years BWEA Conference, Godfrey Bevan, renewable energy director from the Department of Trade and Industry (DTI) commented: Having a success story, showing that there are now some technologies that are on their way to having a stable market without NFFO, is a crucial step in maintaining NFFO or another type of support for other renewables.
Some developers seem to have decided that the NFFO is so complex that it is easier to go it alone. Moreover the 'Green Pool' idea (see Renew 105), with consumers buying green power at premium prices from a separate renewable power market, could make it possible for separate independent projects to survive without NFFO subsidy. In effect they would be subsidised directly, but just by Green Pool consumers, rather than indirectly by all electricity consumers, . As we noted in Renew 105, Green Electron is pioneering the approach. However does that mean the NFFO is not needed?
Pre-competitive technologies need support to achieve price convergence - just as new emerging technology needs R and D support to get started. And even when they have successfully achieved convergence, there might be a case for further support - to ensure that the green pool expands. One option might be to provide tax concessions for companies involved with the'Green Pool' - possibly reflecting the avoided environmental costs of using renewable sources.
The number of live projects supported under the Non Fossil Fuel Obligation and the Scottish and N Ireland schemes continues to expand.
According to ETSU's journal 'New Review', by mid summer last year there were 171 operating projects supported by NFFO 1, 2 and 3, SRO-1 and NI-NFFO-1, totalling 373 MW declared net capacity. By the end of the year it was 182, with 416 MW. Most of the growth was due to 6 new landfill gas schemes under NFFO-3.
Otherwise however NFFO-3 is still only moving relatively slowly, with just 17 projects(29MW DNC) so far on line, compared to the 627MW initially allocated for support. 14 of the existing projects are for landfill gas (see later), 1 is for wind, 2 are for small hydro. The main casualties continue to be wind and waste combustion projects.
However a lengthy so called 'shoo-in 'period was allowed in NFFO-3 before contracted projects had to start up, and more should be coming on stream soon. So reaching the 1500 MW DNC target by the year 2000 still seems possible - depending of course on
progress on the new NFFO-4 and the final NFFO-5. At the launch of NFFO-4 in Feb. The DTI reported that the total for all renewables had risen to 428MW DNC.
.
New Review is no longer freely available in print, but can be accesses on the World Wide Web at:http://www.etsu.com/NR/
While the Conservative Government has focused mainly on the success of the NFFO (see above) and on the benefits that may emerge from the next phase of privatisation, when the electricity market is liberalised, the opposition parties have been staking their claims.
At a major SERA Conference on the prospects for 'A Green Labour Government' held in London in January and attended by more than 700 people, Labour's Energy Spokesperson John Battle MP joined prominent environmental groups in a panel discussion to discuss Labour's green energy agenda.
In the session on Energy, Battle said:
"The challenge of climate change in the new century will demand joined-up thinking in politics and across Government Departments. In our comprehensive policy document "In Trust For Tomorrow" we set out how to tackle the adverse impacts of human activity on the environment."
He added "Energy Policy is crucial, not just in terms of the need for conservation and for energy efficiency, but in the development of the new environmental industries of the future. Promoting environmental concerns is not at odds with economic efficiency or social justice: it goes with them hand in hand. In fact, environmental protection will generate the jobs of the future."
According to their Press Release, Labour say they have 'tough but realistic targets for increasing the proportion of electricity generated from renewable sources. We want to see it increase from 2-3% today to 10% by 2010 and 20% by 2025. We will achieve this by diverting money from the DTI's existing energy research programme away from nuclear power and into renewables. We will also divert the nuclear element of the Non Fossil Fuel Levy, subject to that money still being available when Labour reaches office'.
Labour also said they were 'listening carefully to representations from major players in the industry such as the Energy Intensive Users Group, who are calling for reform of the way the electricity wholesale market(the Pool) operates. Reform could allow a market led solution to reducing bills and allow renewable energy greater scope to compete with fossil fuels.'
According to Labours Press Release, the Association of Electricity Producers has said that with structural reforms, they were "confident that, if all the relevant factors were taken into account. renewable energy could compete favourably with other technologies both on cost and on environmental impacts". [Renewable Energy - a policy review, AEP 1995].
Other panellists in the energy workshops at the SERA Conference were David Green of the Combined Heat and Power Association and Eoin Lees of the Energy Saving Trust. Catherine Mitchell of the Science Policy Research Unit at Sussex University chaired no easy task with 100 plus people attending the workshops.
As we reported in Renew 104 the Liberal Democrats published a report 'Conserving Tomorrow' which set a target of a 20% renewable energy contribution within fifteen years, coupled with a £1bn pa energy conservation programme. See also Renew 105 (and Renew on Line 6) for further discussion.
The Energy Technology Support Unit's Conference on Social and Economic Impacts of renewables held in Stratford upon Avon last September noted that local rural employment issues were of central importance. And according to Tony Duffin from ETSU, 'Forewarning of the resistance to energy from waste plant or wind farms in the UK might have enabled the industry to prepare better development plans'.
Certainly the British Wind Energy Association (BWEA) have at last taken the problem of local reactions seriously. As we noted in Renew 104, they have launched a publicity campaign for wind, to counter what they see as the misinformation put out by anti wind farm groups.
Launching the campaign last year Jonathan Porritt commented;
Much
of the information being put out is ill-informed, narrow minded, emotional
rubbish. Unfortunately it drops into very receptive minds and is rapidly taken
up by local pressure groups as a justification for their own legitimate concerns.
The Country Guardian group (see Renew 105) were seen as the main activists: despite being a small group (with 200 or so members) they have had a lot of influence.
According to a survey of press coverage of windpower carried out for the BWEA, out of 959 press cuttings, 47% were negative, most of these being letters. 22% of the anti wind farm letters originated from Robert Woodward, Vice president of Country Guardian. ëRound Robiní letters from Country Guardian accounted for 32% of all negative letters. Two round robins from Woodward appeared in 31 newspapers throughout the country.
As we noted in Renew 105, Woodward has argued that what Country Guardians
really want is more energy conservation. Replying to an interesting article on
windfarms by Peter Harper in Resurgence 174 (Jan/Feb 1996), Woodward has claimed
that;
He noted that according to the Association for the Conservation of Energy, typically 1.32p/kWh was saved by the Energy Saving Trust's projects, whereas the difference between the 'pool price' (2.5p) and the NFFO levy support for wind (4.3p) was 1.8p/kWh - only 1.5 times more, not 18 times more.
For further discussion of Country Guardian's activities see the forthcoming Renew 107.
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