Fiona Harvey 

Has the wind revolution stalled in the UK?

Britain should be a world leader in wind energy but subsidy changes and a hesitant public are scaring investors
  
  

Windfarm next to Drax power station
A windfarm next to the Drax coal-fired power station in North Yorkshire encountered strong local opposition. Photograph: John Giles/PA Photograph: John Giles/PA

Visit the biggest coal-fired power station in western Europe, and the first things to notice are the wind turbines slowly wheeling round next door. Twelve have now been built, their slender white poles and delicate blades dwarfed by the massive cooling towers of Drax power station belching clouds of steam into the Yorkshire sky – old and new energy in striking juxtaposition.

But though the plain next to a huge industrial complex – burning millions of tonnes of coal a year – may seem the perfect place to site modern wind turbines, putting them up involved a battle with local people. The planning application faced a barrage of objections, with opponents branding the turbines an eyesore and decrying the noise and "pollution" they would cause. Asked why the new turbines were so offensive next to a far bigger fossil-fuelled power plant, one local resident said simply: "We're used to the power station."

The case sums up some of the biggest problems for those hoping to build a renewable energy industry in the UK. On paper, the UK should be a world leader in wind energy generation, with the biggest wind resource in Europe, an advanced energy infrastructure and for years a technological lead in developing turbine technology.

Yet the UK has fallen to eighth place in the world in terms of wind generation capacity installed. It is ninth among EU member states in the proportion of electricity generated from wind: 4.5% compared with an EU average of 6.3%.There are no indigenous UK wind turbine manufacturers and almost no basic manufacturing takes place in the country: most of the turbines are assembled from components built overseas.

The reasons are numerous: a chopping and changing subsidy regime, restrictive planning regulations, the cushion of North Sea gas and a hesitant investor base. But key to all is a lukewarm reception to wind from politicians and sections of the public. Where other countries, from Germany and Spain to China and India, have seized their opportunities to kickstart lucrative industries, the UK blew an early technological lead in wind and failed to capitalise on its natural resources.

"The UK took a long time to get up and running [in wind], to become competitive and a good place to invest in onshore wind," said Keith Anderson, chief corporate officer of Scottish Power. "For years we did not have an attractive [subsidy] mechanism, and didn't manage to push forward."

This month the grumbles of opposition to wind came to a climax. The letter to the prime minister calling for wind subsidies to be cut, signed by more than 100 Tory MPs, was the culmination of months of campaigning from a coalition of free-market thinktanks, politicians, special interest groups and sections of the media, creating an anti-wind backlash that has reached nearly the highest echelons of government.

And the UK's wind sector – already worth billions a year to the economy, but with the promise of further overseas investment that could create hundreds of thousands of jobs and develop a world-beating industry – is worried.

"This is a concern," said Magued Eldaief, managing director at GE Energy in the UK, who added that the company was watching political developments "very closely". His views were echoed by nearly all of the major wind companies looking to invest in the UK.

One reason for their concern is that we have been here before. Few realise today that the UK had the opportunity to be the world leader in wind energy less than two decades ago: in the 1980s and early 90s, British engineers were recognised as the most advanced in developing new turbines. In part, the technology was developed in response to the oil shocks of the 70s, and in part spurred by an ideological drive to find alternatives to coal after the miners' strike.

But, starved of government assistance and competing with historically low fossil fuel prices, the fledgling industry died out, the technology left to gather dust or sold overseas with departing experts.

With a renewed emphasis on cutting carbon emissions from the early 2000s, wind started to pick up again. In 2002, the unwieldy subsidy system was replaced by a new scheme where wind generators were rewarded for the energy they produced, above the open-market price. Critics said the scheme was over-generous, but more people were attracted into the sector and the number of developments started to rise, with a record 1.2GW of onshore and offshore capacity built in 2010.

Planning permission, however, was still a major sticking point. Windfarms could easily be held up for several years in the complexities of the planning system, adding hundreds of thousands or even millions of pounds to the cost – often money that was lost if the application was unsuccessful. When the world's biggest wind company, Vestas, closed its UK factory in 2009, the chief executive, Ditlev Engel, said the difficult planning laws were a key reason.

Even when planning permission was granted, companies still faced difficulties getting their windfarms connected to the grid: because of a shortage of capacity at the National Grid, it can take years to have the cables built.

One way of avoiding planning problems is to build turbines off the coast. Offshore wind has only recently started to take off, as it took companies years to build turbines robust enough to withstand the buffeting of the North Sea.

The UK is already a world leader but with just 1.7GW of capacity, or the equivalent of a single large fossil-fuel power station, the early lead is only because so few countries have yet seriously considered the technology. Offshore wind is about three times as expensive as building turbines on land.

All the companies considering offshore development in the UK told the Guardian their priority was to bring down the cost of the technology. "Driving down costs is absolutely essential," said Matthew Chinn, UK managing director of Siemens Energy. "We need to make sure the cost to the consumer is affordable."

Amid the adverse conditions faced by the fledgling wind industry, all of the companies competing to build machines for the British market are from overseas: Vestas of Denmark, General Electric of the US, Siemens of Germany, Gamesa of Spain and Mitsubishi of Japan.

Their main customers are electric utilities and specialist wind developers, which construct and run windfarms. Most are also from overseas: Scottish Power, owned by Iberdrola of Spain; the Danish Dong Energy; Swedish Vattenfall; and utilities E.ON and npower, which are both German.

But the proposed wave of investment cannot be guaranteed. For companies to put forward the cash, they will need reassurances from government. All of the major players in wind in the UK, when contacted by the Guardian, cited regulatory certainty as the key factor or one of the top factors in making decisions about investment. Engel said: "The most important issue that our customers have is the longevity and long-term framework that is required to put in these investments, which are huge."

Representatives from China, the Middle East and Europe have been inspecting the UK's initial offshore wind installations, with a view to developing offshore wind industries of their own. So the same investors that Ed Davey, the energy secretary, is now wooing can expect to be besieged by interested governments from around the world.

"The world is a small place today," said Magued of GE Energy. "Investors are going to look for opportunities that provide the best returns with the least risk. If the opportunity is elsewhere, that's where they're going to go."

That is the core of the problem: if the UK is taking part in a beauty contest for wind development investment, against some of the strongest economies in the world, then the letter from Tory MPs felt to many potential investors like a raspberry blown by the ruling political party.

Last week, David Cameron and Nicolas Sarkozy agreed a £500m deal to bring new nuclear development to the UK, to overwhelming praise from Conservatives and other politicians.

That enthusiastic reception for 1,500 jobs that will not materialise until at least 2017 – a fraction of the number of skilled jobs that the wind industry is hoping to create much sooner – contrasted with the hostile headlines for wind development.

Renewable companies have made it clear: they are willing to invest, and they believe they can create a thriving sector with long-term jobs and economic value – but only if the UK's politicians and voters want it.

 

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