Britain's energy crisis: Twisting in the wind

Fuel bills are soaring due to our increasing reliance on imported gas. Wind power should be part of the answer but realising the government’s grand plans could end up costing the average customer an extra £400 a year

Rocketing gas prices — up 35% last week — have put the spotlight on Britain’s looming energy crisis. With North Sea oil and gas running out, we are becoming dependent on imports and risk being left at the mercy of world prices.
The government hopes two new sources of power, wind and nuclear, will bolster Britain’s supply and at the same time help to meet ambitious targets to cut greenhouse-gas emissions.
Both are in trouble. The planned expansion of wind power is being held up by a myriad of obstacles from planning objections to electricity grid constraints. The cost of investment is huge and likely to lead to even more rises in household electricity bills.
And last week the French pulled out of negotiations to buy British Energy, which runs our nuclear power stations, plunging the sector into uncertainty.
THE problems with wind power can be illustrated by the experience of Amec, the project management group.
Since the early 1990s the company had been working on plans for a wind farm near Hexham in Northumberland. This year it was given a letter from the Ministry of Defence objecting to the construction of the farm. The MoD said the 20 proposed turbines, along with two adjacent projects, would have an “unacceptable impact” on the radar systems at the Royal Air Force base at Spadeadam.
Amec was furious. It had been in contact with the MoD since 1993 about plans for a wind farm in the area and had never been told of any problems with the proposal. Now, 15 years on and nearly two years after Amec began the formal planning process, the MoD said the 125-metre towers would “clutter” radar systems and increase the likelihood of an “air disaster”.
The problem, it emerged, was that MoD technicians had wrongly mapped the positions of the turbines. Once the error was spotted, it turned out that they would be in the line of sight of Spadeadam’s two air-traffic control radars. The MoD’s blunder had suddenly left years of work, and millions of pounds of investment, blowing in the wind.
It was almost comically tragic. Yet the situation was sadly typical for Amec’s fledgling wind business. After nearly a decade, the company has managed to get only one wind farm approved; seven others have been rejected or are stuck in planning. It is no wonder that chief executive Samir Brikho, also chairman of the government’s Energy Excellence Group, decided to stop the bleeding. He put the business up for sale last month.
Even with all the problems Amec has faced, it seemed an odd move for the company. Britain is on the verge of one of the most ambitious wind-energy projects in the world as it strives to meet emissions targets and to free itself from reliance on imported energy.
Yet Amec’s experience is just a taster of the problems that stand in the way of industry and the government as they set out to achieve Gordon Brown’s 2020 goal of ringing Britain with up to 7,000 offshore wind turbines, capable of producing more than a quarter of the nation’s electricity. Today, wind power in Britain supplies only 2.5GW — one gigawatt being enough to power about 750,000 homes.
It will be a huge industrial undertaking. “We estimate that to meet renewable targets, industry will have to spend about £100 billion by 2020. It’s an unprecedented level of investment,” said Paul Golby, chief executive of Eon UK, the German-owned group that is one of Britain’s biggest power companies. Wind is expected to account for at least £60 billion of the total.

Supporters charitably call the target “ambitious”. Detractors deride it as “unachievable”, or worse, a “total scam”. On the cusp of the largest energy infrastructure investment in the country’s history, difficult questions are being asked of wind power.
Tony Lodge, a researcher at the Centre for Policy Studies, argues that wind is not the solution to Britain’s dual goals of reducing carbon emissions and replacing the 32GW of old power stations to be retired over the next decade. The subsidies required to fund development alone “will plunge thousands of households into fuel poverty. It’s a total scam,” he said. “Britain is on the precipice of a big problem.”
Golby said that meeting the renewable-energy targets will push up household bills by about £400 a year.
Aside from the cost, Lodge argues that the intermittent nature of wind means that it should remain at best a marginal power source, not the linchpin of Britain’s energy strategy.
There is nothing new in these arguments. Sceptics will never accept that the nation should be dependent on something over which we have no control — when, and how strongly, the wind blows. Yet after decades of technological advancement and research, Maria McCaffery, chief executive of the British Wind Energy Association, said that “we have dispelled the myths, we have answered the big questions”.
Indeed, the consensus in the energy industry is that the urgent need to address a looming energy gap, and pollute less while doing so, makes wind the best option.
“You can say, ‘Let’s take a carbon holiday until things like clean coal and carbon capture are ready’. But those are a decade or two away. If you believe the Stern report [on climate change], you can’t do that,” said Sarwjit Sambhi, head of power at Centrica. “Offshore wind is the best available technology, whether you like it or not.”
The problem lies in making the grand vision a reality. McCaffery calls the coming wind revolution the “biggest job-creation event since North Sea oil”, estimating that it will lead to 160,000 new jobs.
AN unassuming factory on the Isle of Wight represents about half of Britain’s wind-energy expertise. The site is where employees of Vestas, the world’s largest wind-turbine manufacturer, make giant turbine blades. Its other operation is a tower facility in Campbeltown, Scotland. That’s 1,100 workers in all.
Peter Brun, head of government relations at Vestas, said Britain has “immense promise” because it must meet the target, set by the European Union, of generating 15% of its power from renewable sources by 2020 — a four-fold increase on the present level. Even so, the company has no plans to increase its presence here.
“We set up in 2002, but we were too optimistic. There is great potential here, but speaking is one thing, and following through with practical implementation is another. That’s what we are waiting for. There are still big barriers, like access to the electricity grid and planning procedures.”
Closing the gap between the ambition of policy and the planning process is critical. According to the British Wind Energy Association (BWEA), of the 15 gigawatts worth of wind projects that have been put through the planning process since 2002, the fate of 6.5GW of projects has yet to be determined. Some have been in planning for five years. The MoD alone is responsible for holding up 10 projects because of concerns over radar interference. However, a recent memorandum of understanding that it signed with industry could help to break the impasse.

“There is no consistency, no timelines, no adherence to planning guidelines, and no transparency,” said McCaffery. “If we had those, we would have much better predictability, which would send a clear signal to industry. It’s too much of a lottery at the moment.”
A bill to reform the planning laws is in the House of Lords and is expected to be passed by next spring. It would establish an Infrastructure Planning Commission to review proj- ects, taking the power out of the hands of local councils, where they most often get bogged down.
The utilities argue that while this will certainly help with vital transmission network upgrades and offshore projects, the reform will do nothing for onshore wind farms, which are the ones that cause most protest from local communities. That’s because the Infrastructure Planning Commission will have the power to review only projects that are 50MW or larger. Nearly all onshore farms are smaller that that. “This will do nothing for onshore wind power,” said Tom Murley, head of renewable-energy investing at HG Capital.
COSTS have also soared. Demand for turbines far exceeds manufacturing capacity, and the price of the commodities used to make them, like steel, has shot up. The cost of offshore developments is now approaching £3 billion per gigawatt generated, twice what it cost five years ago.
This means that the government’s wind subsidy programme, the renewables obligation credits (ROC) scheme, already one of the most generous in Europe, will probably have to be sweetened further to attract developers to Britain. That would mean a further increase in consumers’ bills.
Under the ROC scheme, for every megawatt-hour of power that a company produces from renewable resources, including wind, it receives one ROC, effectively a green energy subsidy that helps developers recoup the huge upfront costs. The government has proposed changes to the system that will skew investment toward wind by increasing the amount given to wind power to 1.5 ROCs per megawatt-hour, and reducing the ROCs for other sources.
That may not be enough. “The ROC changes were proposed in May last year. The cost has risen significantly since then,” said McCaffery. “We may need to move up to 2.4 ROCs per megawatt-hour.”
Most of the country’s electricity transmission network, the grid, was built in the 1950s and 1960s. It is not equipped to handle the wild peaks and troughs typical of wind production. Wind’s intermittency means that developers must overbuild their sites to guarantee a minimum average output. The same would be required for the grid.
National Grid estimates that capacity — today about 80GW — will have to increase to as much as 100GW to take account of wind. And because wind farms will be dotted all over the country, and off the coast, extensions will also be necessary. All this means billions of pounds of investment. Who pays for it, and how, is a big question.
Chris Bennett, future transmission networks manager at National Grid, said: “With the combination of the age of the assets, and the new connections required for renewables, this is absolutely the biggest thing we have ever had to do.”
The company is in talks with Ofgem, which regulates the electricity and gas industries, to allow it to begin building grid connections much earlier in the process rather than being required to wait, as it now must, until a wind farm is approved and financed before it begins its end of the work. National Grid would in theory take on more of the risk upfront, but would be able to levy higher charges once a project began operation.
“A lot of money is going into transmission, and there are questions over how those costs are going to be [spread] among consumers and the industry. It is a critical issue,” said Centrica’s Sambhi.
The technological leaps that large-scale wind power would require are perhaps the most daunting piece of the jigsaw. With today’s technology, bringing the 430MW generated from Centrica’s Lincs, Lynn and Inner Dowsing offshore farms on to the beach and into the grid, for example, would require enough cables to fill a three-lane road. The three farms together are less than half the size of the London Array, the Thames Estuary project that is the largest proposed offshore farm in the world, at 1GW.
The likes of Siemens and ABB are developing new technologies to reduce the number of cables that are needed and to cut the loss of electricity as it is transmitted from miles offshore. Matthew Knight, head of power transmission at Siemens, said: “It’s all quite experimental. The five substations we are working on in Britain are much larger than anything else in the world right now.”
There are some green shoots. Last week the MoD withdrew an objection it had lodged against the 12-turbine East Riding wind farm near Beverley in Yorkshire. The move came only days after it signed its memorandum of understanding with industry, stirring hopes that the MoD will spring no more surprises like the one it gave to Amec. It is a small advance compared with the scale of the challenge at hand, but as HG Capital’s Murley said: “It’s progress.”
However, he added: “There is a huge scale-up issue that needs to be addressed. The government’s targets are not achievable.”