Wind Power faces bleak future under new electricity rules, experts say

The proposals are forecast to become law in November and aim to reduce both wholesale and customer prices, while improving supply efficiency. However, one part of the legislation is expected to have a heavy impact on the wind energy sector.

In order to guarantee output, electricity suppliers will need to accurately predict their output a minimum of three and a half hours before delivering it.

“NETA will reward those who can accurately forecast what they will produce, and penalise those who can’t,“ said Rob Jones, a spokesperson for the electricity and gas regulator Ofgem, who together with the DTI, are responsible for the legislation.

Because the supply of wind cannot be guaranteed or controlled at whim, wind power experts are presently very concerned about the legislation’s impact on the industry.

“It’s bad news for wind energy. On the one hand we have a government which has actually obliged us to have 10% of supplies coming from renewable sources in 2010, but on the other is introducing policy which works against that,” Nick Goodall, Chief Executive of the British Wind Energy Association, told edie this week. “This is legislation designed for yesterday, and not 10 years time,” he added.

Many other renewable energy experts agree with him. “We will be heavily penalised by the legislation, just because of the unpredictability of wind,” said Colin Palmer, Director of Wind Prospect Ltd, a wind energy developer and supplier.

Although equipment does exist allowing wind power to be effectively predicted it is too expensive and labour intensive for most suppliers.

“NETA will bring uncertainty into any (wind energy) contractual proposition, making it very difficult to finance new projects offshore, which are the most productive, but the most expensive ones to install.” he added.

Ofgem and the DTI argue that wind energy will not be discriminated against in the new legislation because a process of aggregation will be encouraged, enabling small generators to join forces, and thus provide a more reliable output.

“There will be facilities available to small energy generators to help overcome the unpredictability of output issue, which will be through aggregation,” said Simon Street, Chairman of the Specialist Experts Group within NETA.

The DTI and Ofgem are also both keen to stress that the legislation will be open to change, and it is expected that the three and a half hour deadline for output calculations will be reduced after the first six months.

However, wind energy experts remain unconvinced that aggregation can solve the problem. Juliet Davenport, Commercial Director of unit[e], a green energy supplier, sums up their fears. “It is unclear how well aggregation will work and no-one knows how much it can deliver. I suspect not enough to compensate for the 50% loss of revenue that we have estimated losing through the new proposals,” she said.