Conference of the kyoto protocol

Abstract

The United Kingdom power sector has been recognized as a main emitter of CO2 into the environment, which is a threat to the industrialized and developing nation's potential to successfully mitigate climate change. Following the conference of the Kyoto Protocol (KP) and the allocation of emissions target to signatories, it became very important that signatories to the convention must all operate within their assigned limits of emission reduction. This led to the passing of environmental legislations in the UK geared towards the reduction of CO2 emissions.

These legislations led to uncertainties in the economies of investments in new capacity additions, which would be required to replace conventional power plants that would be affected by the implementation of the relevant climate targeted policies.

As a result, stakeholders were consulted by the UK government to shed light on some perceived uncertainties in order to promote investments in green and low carbon generation technologies.

The interest for deployment of Renewable energy sources (RES) has risen not only on a national level but also European and international level for the political reasons of attaining security of supply by diversification into non-fossil fuel sources, and reducing CO2 emissions to address the climate change issue. Targets for RES are set in many countries,

But Renewable energy sources are not yet competitive. Because of the political reasons, government policy in several countries has supported RES to expedite their development.

A RES (renewable energy source) rising fast in deployment is wind energy. Wind energy showcases the generation of power in accordance with the legislation of the UK-Energy white paper: our energy future-creating a low carbon economy.

The current energy policy is now aimed at delivering the twin imperatives of security of energy supply and protection of the environment, most importantly the deceleration of climate change by stabilising emissions of carbon dioxide (CO2) at levels which restrict the rise of global temperature to 2 Celsius or less. The latest UK 2020 target is for 20% renewable energy and a 20% reduction of greenhouse gas (GHG). This report examines how policies and legislations affects the present role and development of wind energy by comparing the past and present policies, the economical impacts of these policies in the United Kingdom, with a discussion on possible changes in these policies for the future.

1: Introduction

The comparative study of energy policy is presented to countries that have started construction of wind farms with the United Kingdom being a part of them. In the United Kingdom, political targets have been set for offshore wind, and governmental support has been put in place to facilitate the deployment.

The effectiveness and the investor's confidence in support of the scheme is being considered as the most important evaluation criteria to enhance the development. The investors' confidence depends on the perceived risk and uncertainties, such as financial risk, technological risk and regulatory uncertainties. This report focuses on the present role of Wind Energy in the United Kingdom, how policies and legislations affects Wind Energy in the UK and it showcases the past and present policies, the economical impacts of these policies and regulatory uncertainties in the political target.

2: The present role of Wind Energy within the UK.

United Kingdom enjoys the best wind regime in the whole of Europe with 50m wind speed over other European countries averaging above 5.5m/s. It has large areas of accessible offshore locations it benefits from, many with better wind speeds.

In October 2008, wind power in the UK passed the milestone of 3 GW when the Lynn Wind farm and Inner Dowsing, located off the Lincolnshire coast were opened. It has been estimated that by the end of 2009, the capacity will exceed 4 GW, further reaching 5 GW and 6 GW by 2010.

There are 211 wind farms operating in the UK, with 2,434 turbines and 3,391 MW of installed capacity. Presently, 2,192 MW worth of schemes are under construction, while another 6,694 MW have planning consent and 8,486 MW are pending planning approval.

Approximately 1.5% of UK's electricity in year 2007 was produced by wind power. In few years to come, this is expected to rise as a result of the government energy policy powerfully supporting the renewable energy generating capacity and the bulk of this renewable energy generating capacity would come from wind power.

The EU target of generating 20% of EU's energy from renewable energy sources by 2020 was agreed by the UK government in 2007. Each country was given targets in which 15% was allocated for the UK. In December 2007, the UK Government announced plans for the expansion of wind energy by carrying out a strategic Environmental Assessment of up to 25 GW of offshore wind farms site as groundwork for a new 8 GW worth of sites which has been already awarded making the total estimated results in the construction of offshore wind turbines to be 7,000. To attain the EU target by 2020, the UK will require 7,500 offshore turbines.

2.1: Structure of the Industry

Owners

These are utility companies with financial interest in having wind farms in their energy assortment by selling electricity and also because of the renewable obligation certificates. Private companies do own smaller projects but the large projects are owned by a group of companies.

Operators

Operators are responsible for the daily operations and maintenance of the wind farm.

Developers

Developers are primarily responsible for the inception of the wind farm to the completion or the construction stage (depending on the contract strategy implemented). They take charge of all planning and licensing work for the project. Bigger developers play more active roles through the construction stage as well as offering operation and maintenance.

Turbine Manufacturers

Turbine manufacturers are responsible for the supply of wind turbines. Some of the manufacturers offer engineering, procurement, installation and commissioning (EPIC) options for all aspects of a wind farm while others act as suppliers of the wind turbine to be installed into the wind farm by developers.

Manufacturers simply acts as suppliers for onshore turbines while for offshore turbines, they acts as (EPIC) contractors although this approach is now beginning to change due to the development within the industry. Examples of turbine manufactures in the UK are; Vestas Blades UK, Evance Iskra wind turbines, etc.

First Tier Suppliers

First Tier suppliers offer services or products to turbine manufacturers or the developers/ contractors e.g. gearbox, generators, transformers etc

Second Tier Suppliers

Second Tier suppliers supplies components parts to the first tier suppliers e.g. flanges, electrical components, mechanical parts etc

2.2: Wind energy activities in the UK

One of the leaders in offshore wind developments in the UK is DONG Energy. DONG Energy partly owns Gunfleet Sands project which is similar in size to the Barrow Offshore Wind Farm which went on stream in 2006. Also, they fully own Burbo Bank Offshore Wind Farm which is now operational. London Array, Walney, West of Duddon Sands, Cirrus Shell Flat Array, Scarweather Sands, Westermost Rough and obviously Gunfleet Sands Offshore Wind Farms are fully or partly owned by DONG Energy.

Barrow Offshore Wind (Operational)

Barrow Offshore is a 90 MW Offshore Wind Farm which is located approximately 7km south west of Walney Island in the East Irish Sea, near Barrow-in-Furness. DONG Energy and Centrica are partners on this project.

Burbo Bank Offshore wind farm (Operational)

Burbo Bank is a 90 MW Offshore Wind farm located on Burbo Flats in Liverpool Bay. The Wind farm is comprised of 25 turbines, and each of the turbines is capable of producing a maximum expected power output of 3.6 MW. DONG energy fully owns this project.

Gunfleet Sands Offshore wind farm (Approved)

The Gunfleet Sands Offshore wind farm project is located approximately 7km south-east of Clacton-on-Sea, Essex. The project consists of two phases;

Phase 1: Gunfleet Sands 1 with 30 turbines

Phase 2: Gunfleet Sands 2 with 18 turbines

The capacity of each turbine is 3.6 MW, making the total capacity of the Gunfleet Sands Offshore wind farm project 172 MW.

London Array (Approved)

The London Array wind farm will be located more than 12 miles from the Kent and Essex coasts in the outer Thames Estuary. The projects partners are E.ON UK renewable (50%) and CORE a joint venture between DONG Energy and Farm Energy (50%). London Array will be comprised of 341 turbines and concession allows for it to have generating capacity of up to 1000 MW.

Walney Wind Farm (Approved)

The Walney wind farm has been projected to be located 15 km west of Isle of Walney in the East Irish Sea. It will be comprised of 216 turbines and concession allows for it to be generating up to 450 MW. DONG Energy fully owns the project.

West of Duddon Sands (Submitted)

The West of Duddon Sands has been projected to be located 13km west of the Isle of Walney in the East irish Sea. This project is partnered by DONG Energy (33.3%), Scottish power (33.3%) and Eurus (33.3%). The project will comprise of 140 turbines and concession allows for it to be generating up to 500 MW.

Scarweather Sands (Approved)

The Scarweather Sands has been projected to be located in Swansea Bay in Bristol Channel about 5km off the coast of Porthcawl. The project is partnered by DONG Energy (50%) and E.ON UK (50%).Concession allows for this project to be comprised of up to 30 turbines and a generating capacity of 108 MW.

2.2.1: Offshore wind farms

It has been estimated that the United Kingdom owns over one third of Europe's total offshore wind resource and this is equivalent three times the nation's current electricity needs by considering the present rate of electricity consumption.

As of October 2008, UK is the world leader in offshore and wind power generation with 590 MW nameplate capacity. The discontinuation of the (NFFO) i.e. Non-Fossil Fuel Obligation brought about the first development in UK's offshore wind energy, giving rise to the Gunfleet Sands offshore wind farm and Blyth Offshore wind farm.

The UK has started the developments of two rounds offshore wind sites with the third site recently introduced in 2008.

Round 1

The first of the round one projects "The North Hoyle" wind farm was commissioned in December 2003. "Scroby Sands" was the second one which was completed a year later in December 2004 followed by the 90MW "Kentish Flats" in 2005. In July 2006, the fourth "Barrow Offshore" with 30 turbines was completed while seven of the outstanding projects have received planning consents and the remaining four still awaiting consent.

Round 2

The department of trade and industry (DTI) developed a tactical framework for the offshore wind industry following the difficulties encountered in getting planning consents for round one offshore wind farms and the pressure of reducing CO2 emission. In December 2003 round 2 was announced with 15 projects and a combined capacity of 7.2 GW.

Round 3

The third round of site allocations was launched by crown estate in June 2008. Round 3 is envisaged on a much bigger scale than rounds 1 and 2 with up to 25 GW capacities. In other to award leases to developers, a competitive tender process was run. The bidding process closed in March 2009 with over 40 applications from different companies. Once the leases are secured, developers would secure planning applications which is unlikely to be completed before 2012 thus the first round 3 projects won't commence electricity generation until 2015.

2.2.2: Onshore wind farms

Onshore wind farms were the first set of wind farms built in the United Kingdom and they currently generate more power than offshore wind farms. The British Wind Energy Association made a forecast in a report on March 2006 that onshore wind turbines will be able to supply 6,000 MW peak, or averagely 5% of the required National electricity by 2010. With many projects held up in the planning system, acquisition of planning permission for onshore wind farm is difficult despite its potential coupled with high rate of refusal. Over 4 GW worth of projects, which is more or less half of all wind farm planning applications have had objections from airport and traffic control due to their impact on radar.

According to Ofgem, onshore wind farms produced 1,734 GWh in 2005 and average of 198 MW which is expected to rise to 2,500GWh in the following year. Onshore wind farms in the UK generated 769GW in 2005 according to (DTI) department of trade and industry while offshore farms generated 204 GWh.

In 2007, the planning permission problem was aggravated due to scarcity of spare parts for certain models of generators, leading to some of the turbines not working for over six months triggering issues in planning consents requiring removal of then non-functional turbines.

2.3: Policy Drivers Supporting the implementation of Wind Energy

The National policy for England sets out series of planning policy statements (PPS). These planning policy statements are legally binding and maybe treated as national considerations in determining planning applications.

The National planning policy for renewable energy is "PPS22 Renewable Energy" and it was published in 2004. A companion guide was accompanied by it, which discusses the planning and development of renewable energy scheme across England. Also important to the development of renewable energy is the (PPS1) "Planning and climate change-supplement to Planning policy 1" which precedes the PPS series and sets out how planning in providing new homes and jobs, and providing infrastructure needed to communities would help shape places with lower carbon emissions and resilience to climate change.

Another National policy driver is the National Renewable Energy Strategy-July 2009. This strategy shows how the UK can reach its goal of 15% renewable energy target by 2020. It will involve the production of energy from renewable source like wind energy by 2020 in other to supply electricity to approximately 26 million homes in the UK and also 4 million homes with their heating needs.

Government's action towards the renewable energy market would also help to drive the progress further. By 2020, the obligation on energy suppliers to get an intensifying proportion of electricity from renewable sources, coupled with the exemption from climate change levy will be worth around 1 million yearly to renewable energy industry.

Renewable heat incentives and feed-in tariffs have been introduced to enable households, communities, public services and businesses generate their own renewable energy. These will be provided as guaranteed payments for the energy they produce.

Also, there has been an obligation on energy supply companies which is the Carbon Emissions Reduction Target (CERT) to install renewable energy equipments such as wind turbines in domestic premises.

In addition to the above mentioned, other measures have been implemented to encourage the use of renewable sources of energy, most importantly to provide modest support for the wind energy system within the united kingdom. In addition to the tariffs, the following measures stated below also supports wind energy technology;

  • The Low Carbon Buildings Programme-This is the provision of grant support for small scale renewables. It involves two funding streams, one for increased volume transactions for communities, new developments etc and the other for the consumers.
  • The Carbon Reduction Commitment (CRC)- This is an obligation on bigger companies whose business does fall in line within the scope of the EU-ETS (European Union- Emission Trading System) to reduce carbon emissions and this will make them move towards power generation from renewable energy sources.
  • A new Community Energy Saving Programme (CESP) is also introduced, funded by energy supply companies, in other to upgrade community buildings and social housing.

Grant funding has also been used additionally in supporting individual renewable energy technologies such as Offshore and Onshore wind.

3: Effects of energy policy and legislation on Wind Energy

The Government published its new policy to promote renewable energy In February 2000. The aims are:

  • To assist the UK renewable energy industry to become competitive both at home and export markets thus, creating job opportunities.
  • Providing assistance to the UK in meeting the national and international targets in reducing emissions and greenhouse gases.
  • To motivate the development of new technologies required to provide the basis for continuing the growth and contribution from renewable energy into the longer term.
  • To help in the provision of secure, sustainable, diverse and competitive energy supplies.
  • To make a contribution to rural development

The objective is to boost the contribution of power supplied from renewable energy to 5% by the end of 2003, rising to 10% by 2010, subject to the cost to the consumer being acceptable. The Government's new strategy has a number of key policy themes, including the new Renewable Obligation for England and Wales.

3.1: How energy policy and legislation has promotes Wind Energy

Energy policy and legislation has promotes Wind Energy in series of ways. A major point is the planning bill which was introduced to the UK parliament on the 27th of November 2007. It received Royal consent on the 26th of November 2008 and it is now the Planning Act 2008. The main body of the Act applies to England and Wales and the Act includes provisions on:

  • The authorisation of projects for the development of naturally significant infrastructure.
  • National policy statements; which sets the framework for decision by the IPC.
  • The imposition of community infrastructure levy to support infrastructure development and funding at the local, regional and sub-regional levels.

3.1.1: The Renewable Obligation Scheme

Renewable Obligations currently stands as the primary motivation for Wind Energy in the United Kingdom. It was introduced in 2002 and recently extended to 2037. It stands as a measure that requires all licensed electricity suppliers to base a specific portion of their sales from renewable energy sources. The percentage began at 3% and increases annually. By 2010 it would be 10.4% and 15.4% by 2015.

Presently, the Government has decided it wants more assortments; therefore Renewable Obligation is being lined. From April 2009, offshore wind energy will receive 1 ROC per MWh while offshore wind energy will get 1.5 ROC per MWh of power generated.

The ROCs can be traded separately from the electricity. Compliance with the Renewable obligation will be demonstrated by suppliers presenting ROCs to Ofgem (Office and gas electricity marketers).

Suppliers may fulfil part or their entire obligation by paying a buyout price to Ofgem as an alternative to supplying renewable energy. In the RO Statutory Consultation, the Government set the buyout price at 30/ MWh (equivalent to 3p/kWh) until the 1st of April 2001, thereafter to be adjusted in line with the retail price index.

3.1.2: Feed-in tariffs

The Renewable Obligation was successful in drawing the energy supply companies into the renewable market, but provided lower capacity growth compared to other countries. The industry believed that more measures were needed in bringing energy users towards the market too, and this led to the campaign by the Renewable Energy Association and Friends of the Earth to introduce the Feed-in tariffs alongside the Renewable Obligations.

The government resisted to it at first but later agreed and introduced an enabling legislation in the 2008 Energy Act. In other to avoid destabilizing the Renewable Obligation, an increased limit of 5MW has been set for the feed in-tariffs. The tariffs being designed currently will be introduced in April 2010. They are likely no to be Feed-in-tariffs rather production-tariffs, meaning incentives will be paid for every MWh produced, whether it is locally used or fed into the grid.

3.2: How energy policy and legislation has impedes Wind Energy

The two main issues which impede the development of wind energy in UK are the issues relating to planning and connection, and these attracts a considerable amount of the project development activities.

3.2.1: Planning and Consenting

Consenting process have been one of the primary barriers of renewable energy development, especially wind power in the UK. Onshore installations require planning permission for projects below 50MW; the local authority grants this permission, while larger projects consent is given by the government.

Following the Planning Act in 2008, the planning approval system is being changed currently and this establishes an innovative Infrastructure Planning Commission, which will be handling all major infrastructure projects including energy projects over 50MW. Confidently, this will fasten the consenting process for larger projects.

National Policy Statements is provided by The Planning Act and this is prepared for each major infrastructure sector thus, there will be a (NPS) for the renewable sector. Hopefully, this also improves the local planning process for systems under 50MW, which is very uncertain.

3.2.2: Grid Connection

The second key obstacle inhibiting the growth of wind energy in the UK is issues regarding funding and gaining connection to the grid. The networks are fully modified with a complex dogmatic management that shows the way in which system charges and connection is determined and till now no method has been enacted in giving access to renewable energy producers either for the despatch of energy or connection to the grid.

3.2.3: Project Development

Planning and connection have been issues limiting the significant amount of the project development activity of offshore and onshore wind farms. There has been an indomitable and relatively successful anti-wind lobby, which has mobilised resistance in planning applications of many wind farms. This has caused the opposition to applications by local residents on grounds like the effect on property values, noise and many unauthentic factors. About 40% of planning applications were rejected on average over the last 2-3 years.

Presently, corporate bodies own and operate most wind farms, there are few community owned projects. Developers that are engaged actively with local communities tend to have the least objections to their projects.

The (RSPB)-Royal Society for the Protection of Birds, an environmental group has been involved in hostility to certain projects, where they feel the local environmental is at major risk.

4: Economic Impacts of energy policy and legislation on Wind Energy

The three major trends that have dominated the economics of wind power in recent years are:

    Turbines have become larger & taller

    Turbine Efficiency has increased

    Plant investment costs have decreased

Electricity generation from the wind makes sense both economically and environmentally. The wind is a renewable, free and clean fuel which will never run out. Wind energy industry is rising fast and is set to increase as the UK looks for a more cleaner and sustainable way to produce electricity. Turbines are getting more powerful and cheaper, with well-built blade lengths which can exploit more wind and therefore generate more electricity, reducing the cost of renewable generation.

Wind energy is becoming cheaper and the cost is reducing for various reasons. The turbines themselves are getting cheaper as technology improves with components being economically available.

Presently, the average cost of offshore wind power capacity is between 620 - 800/ kW, Costs by rotor area have declined by 30% between 1989 and 2001 (kWh/m2) and Newer turbine designs have reduced the operating and maintenance component.

Financing cost is also coming down as lenders gain assurance in the technology. Wind power is becoming more competitive due to the rise in cost of using conventional energy technologies. The figure below indicates how the cost of wind energy has fallen under the Non-Fossil Fuel Obligation (NFFO) contracts. The Renewable Obligation was introduced in 2002 and it has masked underlying trends Economics of wind energy are getting strong, despite the youthful stage of the wind industry. Downward trend in costs has been predicted to continue with the strongest influence being exerted by the downward trend in wind turbine prices.

The global wind energy market is rapidly growing, creating employment opportunities through the export of wind energy goods and services. Wind energy is the fastest rising energy sector in the UK, creating employment opportunities with every megawatt installed. Over 4,000 jobs to date are sustained by companies working in the wind sector, and this trend is considered to rise as the industry develops. The Round two of offshore wind developments has been estimated by the Department of Trade and Industry which could bring a further 20,000 jobs for Britain.

5: How policy could be changed to improve Wind Energy operations

There has been a recent report on the 13th of July 2009, by the Confederation of British Industry CBI with suggestions on a major shift in the direction of the UK energy policy stating that the current approach will endanger the country's ability to meet the climate change target as well as hindering energy security.

In this new report titled "Decision Time", the CBI (Confederation of British Industry) says that 'the current policy incentivises the investment in wind power which serves to divert attention away from other forms of low-carbon energy, such as nuclear and clean coal. The CBI calls on the government to pursue policies that will bring a more unprejudiced energy i.e. a mixture of wind energy and other renewable sources of energy to help boost the energy security'.

The CBI Deputy-Director General John Cridland (2009) said, 'Large chunks of our energy infrastructure urgently needs replacement and we have got tough climate change targets to meet. However, the government's incoherent approach is deterring the private sector's investment needed to get our energy system up to scratch, sustain security and cut emission'.

Cridland went on saying that 'national planning statements are urgently required to build nuclear plants and with firms mapping out their investment plans, it is a case of act now rather than later'.

The CBI also recommends that investment into the grid must also be increased in other to ensure that companies invest in the upgrades and connections needed to support renewable electricity generation within the required timescales.

Finally, a joint government-industry task force should be established by September 2010 to assess whether an additional market mechanism is required to incentivise the volume of low carbon generation that must be built.

The CBI further states that failure to take such actions would lead to a 'business as usual' attitude amongst companies, with an energy future that is uncertain based around intermittent wind power and ad hoc investments in gas-fired power stations, requiring large volumes of imported gas.

The report's results shows that by 2030 gas would provide up to 36% of the UK's energy; coal would contribute one per cent; wind 24%; nuclear 20%; other renewable 12 %; and clean coal 8%. That would mean 64% of electricity would come from low-carbon technologies, behind the Climate Change Committee's 78% target, which leaves the UK to struggle in meeting the long-term carbon reduction targets.

The report later concludes that firms could move towards a balanced pathway for the same level of investment, if the target for renewable energy were reduced from 32% by 2020 to 25%, firms would be given the chance to pick a more cost-effective mix of low-carbon technology. Beneath this pathway, by 2030 gas would make up 16% of the energy mix; coal 2%; nuclear 34%; wind 20%; other renewable energy sources 15%; and clean coal 14%. Therefore, the power sector emissions would halve by 2020 and halve by 2030 again, getting the UK back on track with its longer-term carbon targets.

6: Conclusions

The familiar adage 'there's no such thing as a free lunch" applies intensely in the Wind Energy sector. All modes of Wind Energy supply and uses have some impact on our shared environment, and if we are to be responsible stewards of the Earth we need to seek using its resources as efficiently and sustainably as possible. But in today's world, the need to reduce emissions of carbon dioxide, with its potentially disastrous climatic consequences is seen by many people as paramount.

Wind energy has strong potential as a fuel-free renewable source of energy, which can contribute at least 20% and possibly a much higher proportion of the UK's electricity needs.

Government already intervenes massively in the Wind Energy market but pretends that its

Policy is market-led. The market can be very powerful, within a strategic framework,

But the government should come clean, admit a framework with legislation, regulation

And incentives necessary and also produce a coherent Wind Energy strategy, embracing the market as a powerful tool where appropriate,

Regulation and legislation can help the development of offshore wind by installing financing arrangements to ensure fair competition, forming a transparent market with clear procedures. Reducing uncertainty and risk, giving financial support is a momentum for developers and therefore contribute to attaining the political targets set by governments for RES and specifically offshore wind.

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