Carried along by the winds of fortune

Published Date: 01 June 2009
By ERIKKA ASKELAND BUSINESS CORRESPONDENT

WILLI Heller hates to lose – although he admits he loses 50 per cent of the time. Luckily, the mild- mannered Canadian can still get by doing what he does, which is building wind farms.
Heller's company, Falck Renewables, has developed five onshore wind farms in Scotland and a further 12 are in the pipeline in the UK. Behind energy giants ScottishPower and Scottish & Southern Energy, the firm is the third-largest developer of wind farms in Scotland.The biggest part of his job is getting planning permission. Heller says the UK is the most expensive place in the world to get the green light to start building – as much as £750,000 for a medium-sized farm and that is even before you build a single turbine. And he should know, Falck Renewables – a division of Italian energy business Gruppo Falck – also develops wind farms in Spain, Italy, France, Turkey, Poland and India. The trick is not to go for the tough ones. "We are not foolish enough to get planning permission where we will run into problems – rare birds, or next door to some people or an archaeological site. It costs too much money to go through the development process when you are swimming upstream," says Heller."We don't win 100 per cent. Right now the success rate is probably a little less than 50/50. It is just a fact of business."Although it is one of the biggest wind farm developers in Scotland, Falck isn't a household name. This is due in part to its business model, which involves selling part of the wind farm to the communities in which it develops them. In the UK, Falck works in partnership with Energy4All, a not-for-profit co-operative development group based in Barrow-in-Furness. With Falck and fellow developer RDC Scotland, community-owned co-operatives control parts of wind farms at Boyndie in Banffshire, Ben Aketil on Skye, Kilbraur, in Sutherland, and Fort Augustus in the Great Glen.Local ownership seems to help ease some of the bitterness caused by the development of wind farms. According to Heller, the co-op on Skye raised £700,000 quickly and easily. This was despite local opposition to another wind farm nearby planned by engineering group Amec."They are very keen on it," says Heller. "There is a wind farm next door to us that has been very problematic. It started a year before we did and they haven't even built it yet. It is kind of strange because the locals feel more involved with ours and at the same time don't like the wind farm right next door to us."He says local ownership is an answer to "nimbyism" (not in my back yard) only to a certain extent. But Heller seems relaxed about working with those who oppose him."Nimbyism isn't that rife in Scotland. Every project everywhere in the world is going to a have number of people that don't want it there. And if it is really intrusive, you won't get planning permission. After you build a wind farm, support usually goes up because people there think 'it is not as bad as I thought it would be'. It is consistently about three to one in favour."Part of the attraction is the rewards it brings to communities, not just in a green-loving, environmentally friendly way, but in hard cash. "The communities invest some money, we will guarantee a minimum rate of return about 6.5 per cent. "What we have done is created a financial product that in a normal wind year will give a 10 per cent return on investment. So it has been very, very popular. We have 2,500 people across our four projects in Scotland who have invested along with us." The approach is both effective for the community and for Falck as it defers further the costs of this capital-intensive investment. "To have the local community interested in the wind farm is a lot better than to say we have popped a lot of windmills in the community and we hope you like them," says Heller. He estimates it costs about £1.2 million to £1.3m to produce a megawatt of energy. Which is why support of banks is "critical". Heller says most of Falck's projects require the banks to lend about 70 per cent of the costs. Thankfully, wind farms are usually lucrative enough that banks are still lending – albeit it takes more of them to club together for bigger-scale projects. "Now we have to do a club deal, which is hugely more work for us. You have to arrange for each bank to take a piece of it. We get more or less what we wanted with twice the amount of work to get there," says Heller. Although Falck Renewables is headquartered in London, last year the group tripled the size of its office in Inverness to become the operations centre for its wind operations worldwide. While only about five are employed directly by the group, a further 25 to 30 work with Falck in Inverness as contractors. "The engineering resources in Scotland are quite exceptional. Recruiting people in Inverness has never been a problem," Heller says. "Not only is it a nice place to be, there are well-trained, well-educated engineering capabilities. "I think it is a holdover from the old oilfield days. There are lots of people there who want to stay there and there are lots of people who left who would like to come back."Recently reports from the government's Department of Energy and Climate Change found that the UK was falling far short of its renewables targets. It estimated the UK would only be producing 5 per cent of its energy by renewables by 2020 compared with a 15 per cent target agreed with the European Commission. Scotland, however, is racing ahead thanks to the SNP's pro- active approach. Ministers have approved 23 major energy projects since the SNP took office in May 2007.The Scottish Government wants to have 31 per cent of electricity coming from renewable sources by 2011, rising to 50 per cent by 2020. Experts say there are enough renewable energy projects built or with planning permission to beat that already."The best wind resource in the world is northern Scotland, but there is a very big capacity problem moving the power north to south," says Heller. This is not a problem facing Scotland alone. It is estimated the UK grid will require a £28 billion investment to distribute renewable energy. Heller says: "The system was never designed for large-scale developments where the wind is. You used to build the transmission system around coal plants. You used to plunk those down in the centre of the UK. Wind farms on the coast in high wind areas is not where the grid is built."
BACKGROUND
WILLIAM Heller, 52, set up Falck Renewables in 2002 thanks – in part at least – to the collapse of Enron.Heller was working for Edison International, the largest electric utility in California. In 2000, he moved to London when he was made president of Edison Europe. From there he started up its renewables division. In 2001, energy giant Enron collapsed, throwing several American utility companies into chaos. Edison decided to sell off parts to raise cash. One of those was Heller's renewables business. But rather than dismantle it, he bought the company.Backing the deal in 2002 was Gruppo Falck, a Milan-based group whose history as a steel maker led it to become an energy provider."The Falcks are old friends of mine going way back to my consulting days," says Heller, who worked at consulting firm Mckinsey."They had just reorganised their company and had decided to go into sustainable and green. I said, how would you like to back a wind business?"