It should be a breeze

The British Wind Energy Association's Nick Medic confesses he doesn't understand why there is so much resistance to wind power: "It's a mystery for us as well. There are so many benefits to sustainable energy, it should be a breeze to approve these applications." His main concern is planning. The web groans with residents' groups massing against the masts. But even the august chat-rooms of the Institution of Engineering and Technology, formerly the Institution of Electrical Engineers, argue furiously about wind power's benefits and inefficiencies. Something about wind must be right. Up to 2008, says Medic, Global Wind Energy Council figures put the industry growing at 28% a year worldwide. Car industry giants Nissan UK, Lotus, Ford, VW in Germany and many others have wind turbines on site. Wind adds a gigawatt (Gw) to UK generating capacity every 18 months. Even so, wind now provides a mere 2% of the UK's 80Gw-plus generating capacity. Britain is committed to increasing its use of renewables to 15% of energy consumption by 2020 from today's 3%. And it's too early to tell what the effects of the credit crunch will be. For Bill Bartlett, wind isn't window dressing; it's good business. He's corporate affairs director with McCain Foods, the UK's largest chip producer. McCain's turbines, an installation of three 3-megawatt (Mw) masts installed at a cost of £10m in 2007, provide 60% of its Peterborough factory's electricity over the year – 100% when the wind is strong – at an average load factor of 35%. "We're on track to provide a three to four year payback," says Bartlett. "We're operating in a very competitive market and we have to be efficient. [The turbines] not only make us more effective commercially, they have a huge benefit for the environment." Others strongly disagree. Best, then, for the thinking factory manager to take a step back and look at what's involved. The first thing to think about is why you're doing it. Ronan O'Regan, director of energy and utilities at consultancy PricewaterhouseCoopers (PwC), is working on a range of renewable energy investments with a large retailer. "Last year, energy prices got so high that the issue of energy costs was elevated to boardroom level," he says. Users pay a subsidy for renewables: "If you're a significant user that cost burden will increase over time." And the carbon reduction commitment, to start next year, will be a further burden. Wind's not an easy option. It costs £1m a Mw to install. O'Regan says the renewable obligation certificate (roc), which gives the wind generator £48 or so per Mwh of electricity generated, has been stable. However, the underlying one-year-forward price of electricity has sunk from last summer's £100/Mwh to £40. But he and others observe that, in investing in wind power, you're not guarding against today's oil price but tomorrow's. "The issue," he says, "is what the price will be in five years' time." Bartlett says McCain buys electricity forward rather than spot, so though the collapse of the oil price has dented the business case, "we'll still benefit in the medium term". The company based its business case on the median rather than the highest-price energy forecast. The oil price fall will merely extend the payback by six to eight months. Lots of businesses and public sector outfits like water companies have sites in remote areas that lend themselves to wind. Given enough sites in different locations they could build up a nice portfolio, says O'Regan. The retailer he's working with has half a dozen sites that work that way. But is the site windy enough? The onshore load factor is generally not above 35%, and that's in a good area. Other sites tend to be around the 20% mark. A windy site with planning permission gives you a competitive advantage, says O'Regan. "If it's part of your own property portfolio, even better. You can stick up a 1Mw or 1.5Mw turbine and if you can get it through planning then suddenly you've got something that's quite interesting." Much is made of wind's volatility. But when it's calm in Cornwall it's likely to be windy in Wick, especially in winter. Thanks to the national grid, you can transfer the power from one to the other, just as happens now with conventional power stations. "They tend to even out," says Medic. O'Regan says people are investing in wind because it's zero carbon and the UK has renewable targets to meet: "If you were to stack up a lot of the available technologies, wind still looks better than the alternatives." Another view is that wind systems require fossil fuel generation to support them, since the power they produce comes and goes with the weather. One estimate is that you have to install 1Mw of gas-fired generation and 2Mw of wind generation to get the equivalent of 2Mw of new coal-fired power plant. Angela Gallacher of the Renewable Energy Centre says there are two ways companies can use wind: one is to lease the land and buy the electricity that the wind turbine produces; the other is to "go the whole hog and pay, and get the subsidies, for installing a wind turbine on their property." A company may pay for it all or seek funding from a partner who builds and pays for the turbine, with the company leasing the land to them, taking a rental and agreeing to buy the electricity. System size depends on whether you want to use the power yourself or sell it to the grid. Large installations of 500kw or over are not designed merely to supply one company's power needs, Medic says. They would feed electricity to the grid and offset the electricity bill with the income from the power sold. A medium size 100kw turbine, says Medic, would be appropriate for a farm or an animal-feed mill to supply its own needs. Funding is tricky. Utilities make their investments off balance sheet. But project finance for independent investors is now much harder to obtain and takes longer to put together. If they do get the funding, it's likely to be from half a dozen banks rather than one or two, as before the credit crunch. It could take up to 12 months to get anything done, says O'Regan. Most companies think in terms of payback period for the investment, he adds, but he thinks a better comparison is with capital spending on new buildings. The return on investment is likely to be 15 or 20%, which is better than a typical internal rate of return of 10 or 12%. Medic says most companies don't have the internal resources needed to take the steps to get a 1Mw wind turbine up and running. They won't know how to evaluate a site and do wind tests, though helpfully the Carbon Trust has launched a postcode-driven wind estimator showing wind distribution, carbon footprint and costs throughout the UK. But he also points to the need to find out who the stakeholders are, how to engage them and how to move the project though planning permission to sourcing and commissioning. McCain took a year to consult local residents, the RSPB, Natural England, the local district and county councils, the MoD and others: "We even got involved in bat surveys," says Bartlett. "It could be a little better joined up," he concludes. Once the company won planning permission, the turbines went up in three weeks. Gallacher says there is "so much red tape to get through before you even get your turbine turning that it does become cost prohibitive." (See box.) Planning is supposed to take on average 16 weeks, she says, but can take up to five years. With each extra day the applicant's fees rise to lawyers and others trying to push the application through. Planning is even more complicated than it seems. Aviation radar is one big issue. The MoD is particularly troublesome, partly when it raises a last minute objection after the applicant thought the MoD's concerns had been met. Connection to the grid is a headache. Electricity for areas like London, where there is high demand, is more expensive than supplying areas where demand is lower. "If you connect to the grid in Scotland it creates lots of problems because the demand is all in the south." The cost of transmission is considerable. The grid doesn't just carry the electricity; it also sends signals around to the generators to say what's needed, and when, and pricing information. Most people choose not to live where strong winds blow all the time, so wind power is away from centres of population. That means high voltage transmission lines, with all the planning issues that raises. Particularly if a plant is only operating 40% of the time. A manufacturing firm with sites all over the UK might be tempted to build a wind farm in Scotland to export power to the south: "As soon as you go north of the border there are no grid connections," says Gallacher. Part of the answer would be Scottish and Southern Energy's £320m Beauly Denny project, a 137-mile, 600-pylon overhead line to connect wind, tidal and wave power stations from Inverness to Scotland's central belt. It attracted 17,000 objections. The proposal has now been referred to Scottish ministers after a Scottish-record 105-day planning inquiry. So local wind projects for local consumption might be a more promising investment. Without such projects, says Gallacher, "we're going to be suffering from blackouts" in a few years' time: "Energy security is a huge problem for the UK and wind is our biggest ally." McCain, however, has no plans to erect turbines on other sites. Two sites have residents close to the factories. McCain is in the early stages of making an investment case for its other sites, which might not give as early a return.