wind energy the new goldrush final energy t… · title: microsoft powerpoint - wind energy the new...

Aidan Campbell Policy and Public

Affairs Officer RCN Affairs Officer RCN

Drumadarragh Residents

Association

4. VISUAL IMPACT.

Turning a blind eye!

Obscuring the Impact – I.

Separation Distance Recalculation to H38.

• Stated distance to T2 915 m.

• Actual OS coord. distance 854 m.

Less Separation overshoot - 25 m.Less Separation overshoot - 25 m.

• Width of house - 10 m.

• Micro-siting allowance - 40 m.

• Turbine blade radius - 35.5 m.

• Rear Curtilege - 50 m.

693.5 m.

Obscuring the Impact – II.

• “The impact of the proposed turbines on views from H36 has also been reduced. VRP No. 14 refers. H36 is now 628 metersfrom the nearest turbine proposed.”from the nearest turbine proposed.”

• +++++++++++++++++++++++++++++++

• H36 was previously 657 m. away

• Now it is 29 m. closer.!

++++++++++++++++++++++++++++++++++++

Turbine Dominance..

House OS Distance to Height over

Nearest Turbine House

H8 630 m. 136 m.

H9 619 m. 140 m.

H11 676 m. 152 m.H11 676 m. 152 m.

H19 603 m. 113 m.

H30 668 m. 118 m.

H33 662 m. 122 m.

H36 628 m. 154 m.

Centre Point,

London

• Height 117 m.

Developer’s Conclusions.

“We believe the proposed development can

be built and operated without undue

impacts, either to the character of the

landscape, visual amenity or to the

residential amenity of occupiers of

dwellings in the vicinity of the proposal.” dwellings in the vicinity of the proposal.”

• The visual impact of the turbines is now classed as ‘slight’.

Errors in Methodology.

• Developer Accurate

Height 30-40 m. 10 m.

Location 150 & 200 m. At property

Hub noise 30-40 m. est. 10 m.

Turbine 2.0 MW 2.3 MWTurbine 2.0 MW 2.3 MW

Power Output 100.9dB 104.5dB

Turbine No. 0.0dB 7.0dB

Distance to H19 636 m. 603 m.

Elliot’s Hill 98.2dB 100.0dB

Background plus H19 H38

2 wind farms 34.4 30.4

3 wind farms 41.2 39.6

Increase 6.8dB 9.2dB

“8.7. The predictions indicate that for receptors “8.7. The predictions indicate that for receptors to the east, south and west… cumulative impact issues are not significant. Receptors located to the north of the site may experience an increase…of the order of 1.5 – 2.0 dB ” (FEI p.87).

The Developer’s Conclusion

“…no dwelling is predicted to exceed the

Upper Absolute Amenity Hours Noise

Criterion through the operation of the

proposed Drumadarragh Hill wind farm.”

(FEI p. 81).

Column headed ‘Predicted Level of

Compliance with ETSU-R-97’. Houses

numbered H19, H20, H25, H26, H27, H28,

H29, H30, H31, H33 and H36 exceed this

40dB absolute limit.

Two Incorrect Assumptions.

a. The Absolute Upper Noise Limit is 40, not 35dB.

b. The turbine Source Power Level is100.9, not 104.5dB.

Within Exceed Within Exceed Limit Limit

Both assumptions: 34 11

Change assumption a.: 6 37

Change both a. & b. 0 43

Ice Casting & Lightning Strikes.

• “We do not consider it the applicant’s

responsibility to demonstrate that the

original developers of the existing wind original developers of the existing wind

farms are compliant with the noise limits

they stated…”

• Hayes-McKenzie Partnership

Wind energy Opportunity or Threat?Opportunity or Threat?

Councillor Sean Clarke

Broughderg Area

Development Association

Wind Energy Sustaining

CommunitiesCommunities

Lyle Quigley

Burnfoot Community

Development Association

The Economics of Wind PowerLessons from Scotland

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Professor Gordon Hughes

University of Edinburgh

16th April 2014

Issues covered in this talk

� Background - the role of renewable energy in the Scottish Government’s vision for the future

� What are the key economic characteristics of wind power from a system perspective?power from a system perspective?

� What has been the performance of wind farms in Scotland and the UK?

� How will renewable energy policies affect consumers?

� How should communities assess proposals to develop new wind farms?

23

The Scottish Government’s vision for the future of Scotland’s energy sectorfuture of Scotland’s energy sector

24

Renewable energy in Scotland

� Comparison with Norway

� 95% of electricity production from renewable energy –almost entirely from hydro power

� 30 GW hydro capacity: 45-50% load factor � 30 GW hydro capacity: 45-50% load factor

� Swing producer in Northern Europe

� Scotland’s target

� Renewable production = domestic consumption in 2020, but much lower per person than for Norway

� Mostly from wind with limited marine power - ~13 GW of wind capacity by 2020 up from ~4 GW now

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Constraints on the Scottish 2020 target

� ~2 GW of production from base-load nuclear, equivalent to 48% of domestic consumption

� System balancing

Nominally, 50% of extra wind will replace coal � Nominally, 50% of extra wind will replace coal generation and the rest will be exported

� In practice, due to intermittency, at least 80% will be exported and Scotland will require up to 8 GW of gas

� Transmission: 5-6 GW of new interconnectors

� Scotland’s electricity market will depend on the E&W market - ~48% of generation exported

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Is the comparison with Norway relevant?

� Hydro is more valuable than wind or marine

� Cheaper to develop, especially relative to offshore wind

� More flexible to operate, so higher prices

Norway is less dependent on export markets� Norway is less dependent on export markets

� Acts as a huge battery for Denmark, Germany, etc

� Paid, in effect, for storage as well as electricity

� Exports ~10% of generation, lower transmission costs

� Hydro power supports energy-intensive industries

� These are uneconomic in Scotland with intermittent wind and the cost of gas backup

27

The economics of electricity systems with The economics of electricity systems with large amounts of wind power

28

Projected levelised costs of generation(£ per MWH in 2018)

29

Variability in wind output

30

Consequences of wind variability

� National Grid claims that improvements in prediction will reduce costs of variability: this is not correct

� Even if variations are predicted, higher spare capacity is required to match the pattern of demandis required to match the pattern of demand

� Most backup capacity is provided by gas plants – these require time (> 90 mins) to start and stop, operating at less than optimum efficiency

� NG tends to over-estimate wind output with errors of >20% being common

� Larger margin of spinning stand-by reserve required to balance costs which is paid for by all consumers

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How much does extra wind output reduce emissions of CO2?

� Ireland – Wheatley (2013) gives estimate of 0.27 tCO2 per MWh of wind

� Takes account of start-up & ramping costs

� Texas – Cullen (2013) & Kaffine et al (2013) obtains � Texas – Cullen (2013) & Kaffine et al (2013) obtains estimates of 0.43-0.52 tCO2 per MWh wind

� More coal but main adjustment from gas CCGTs

� Analysis of time profile of GB adjustment allowing for pumped storage and interconnector flows

� Short run role for pumped storage

� Longer run – 65% gas, 35% coal adjustment – with average that is close to Texas for future wind capacity

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Time profile of adjustment to increase in wind output - Great Britain, 2013

-0.2

0.0

Imp

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W in

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ase

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ind

outp

ut (M

W)

-1.0

-0.8

-0.6

-0.4

Imp

act o

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W in

cre

ase

in w

ind

outp

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0 5 10 15Period

CCGT Coal PS33

Effect of wind capacity on level and type of investment in generation

� Matching investment required in backup

� Subsidies or guaranteed prices alter the expected returns for non-wind generators

� Higher price volatility → higher cost of capital

34

� Higher price volatility → higher cost of capital

� Fewer hours of operation

� In Germany and the UK experience shows that it is more profitable to use existing coal plants

� Also favours single cycle gas plants with low capital costs but high fuel costs

� Reduced market return for biomass & similar renewables which require high load factors

Who will pay for the large increase in spare gas capacity from 2011-12 to 2020

35

Wind targets for Ireland

� Target of 40% generation from renewables

� Implies 4800-5300 MW of wind capacity in 2020

� Dispatchable capacity 8650 MW, most gas

� Average demand 4700 MW, peak 7300 MW, base load � Average demand 4700 MW, peak 7300 MW, base load 2600 MW

� Based on historic wind performance

� Peak wind output 4200-4900 MW

� Major problems with main transmission links

� High probability of curtailment on windy days

� Reduced load factors, hence more capacity required to meet 40% target

36

Issues for the Single Electricity Market

� Who pays for cost of curtailment?

� Impact on the cost of capital

� What kind of backup?

About 2800 MW of new OCGTs required – but not � About 2800 MW of new OCGTs required – but not economic at market prices

� Cost covered by capacity payments from SEM

� Can investment in offshore wind be justified?

� Would exports from Ireland to E&W markets be economic and how should they be managed?

37

The performance of wind farms in the UKThe performance of wind farms in the UK

38

Performance of UK onshore wind farms

� Analysis of ROC monthly output for 2002-12

� Statistical models allowing for age, period (wind availability), and location

� Highly significant deterioration in load factors

39

� Highly significant deterioration in load factors

� As plants age for age > 5 years

� For new plants over time

� For large wind farms relative to small ones

� What might explain the decline?

� Were older generations of wind turbine more robust?

� Is investment is focused on quick returns with neglect of good maintenance practices?

The decline in load factors due to age

40

The performance of large wind farms deteriorates faster than small ones

41

Large turbines perform better initially but their performance declines after year 4

42

Are new wind farms a good investment?

� Economic life of wind farms is no more than 15 years

� Many onshore wind farms re-powered after 10-12 years

� After 10 years the residual value of turbines is low, but there is an option value for site redevelopment

43

is an option value for site redevelopment

� Costs of meeting renewable targets much higher than current forecasts suggest due to

� Higher capacity required due to lower average load factors

� Shorter operating lives implies higher replacement costs

� Implications for financing investments

� Not attractive to many infrastructure investors

� Higher cost of capital due to uncertainty about length of investment return and residual values

The levelised cost of wind power based on actual performance is 2-3 times the current pool price

44

Green jobs - does investment in wind power create jobs?power create jobs?

45

What about green jobs?

� Most employment associated with wind development is associated with construction

� Similar to coal or gas per £1,000 of investment

� But wind plants are expensive per MW of capacity� But wind plants are expensive per MW of capacity

� Initial boost to local employment for civil works but almost no long term job creation

� Claims for future exports have not been realised

� Onshore support activities for offshore wind

� Small by comparison with oil & gas sector

� Quite mobile so costly to promote and retain

46

Employment income per £ 000 of capital spending on electricity generation

ConstructionBoilers &

turbines

Mechanical &

electrical

Solar

modulesOther Total

A. Direct capital spending

Nuclear 32 110 11 0 57 210

Coal 32 121 26 0 19 198

Gas 42 110 19 0 32 202

Wind - onshore 28 131 22 0 19 200

47

Wind - onshore 28 131 22 0 19 200

Wind - offshore 42 110 26 0 19 197

Solar - photovoltaic 23 0 41 33 32 129

Solar - thermal 9 31 19 39 32 130

Biomass 32 121 26 0 19 198

Hydro 102 31 19 0 44 196

B. Direct & indirect capital spending

Nuclear 73 165 17 0 95 350

Coal 73 181 40 0 32 325

Gas 93 165 29 0 53 340

Wind - onshore 62 196 34 0 32 325

Wind - offshore 93 165 40 0 32 330

Solar - photovoltaic 52 0 63 49 53 217

Solar - thermal 21 47 29 57 53 206

Biomass 73 181 40 0 32 325

Hydro 228 47 29 0 74 378

Energy prices & economy-wide effects

� Renewable energy targets will increase wholesale electricity prices by 100-150% in the UK

� Since the UK is an open economy with high capital mobility, higher energy costs will primarily fall on wages and/or employment in producing traded goods

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mobility, higher energy costs will primarily fall on wages and/or employment in producing traded goods

� Sectors identified account for 40% of employment in production of traded goods

� Impact will vary from reductions in wage income to complete closure of plants

� Effects are much bigger than any employment in producing capital equipment for renewable energy

How much will households pay for How much will households pay for support to renewable energy?

49

What has happened to UK energy prices?

50

The impact of renewable energy policies on household energy bills

Electricity GasElectricity

+ Gas

A. DECC estimates adjusted for balancing & transmission

Direct 64% 5% 31%

51

Direct 64% 5% 31%

Total

Full pass-through 227% 26% 116%

Partial pass-through 113% 7% 54%

B. Adjustment for wind and capacity payments

Direct 87% 5% 42%

Total

Full pass-through 303% 26% 150%

Partial pass-through 155% 7% 73%

The full impact of policies on the average household electricity bill

52

How can communities benefit from the How can communities benefit from the development of wind farms?

53

How much do wind farms earn?

� In 2014-15 with a conservative load factor of 26%

� Gross revenue ~ £240,000 per year per MW capacity

� Subsidy (ROCs, etc) is at least 50% of gross revenue

� Annual O&M costs ~ £56,000 per MW including a land � Annual O&M costs ~ £56,000 per MW including a land rent of £10-15,000 per MW

� Capital cost of £1.6 mln per MW yields payback period of 8.7 years

� Annual capital cost of £190,000 with an average pre-tax cost of capital of 10% over 20 years

� Payback period falls to 7.9 years if load factor = 28%

� Further reduction in payback period to 6 years if capital cost is £1.2 mln per MW

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Scope for community benefit payments

� In Scotland the recommended payment rate is £5,000 per MW per year

� This is built into the O&M cost since it splits the land rent between landowner & communityrent between landowner & community

� But developers can afford to pay much more for good sites that are efficiently run

� Requiring much larger community benefit payments will ensure that only the best sites get developed –i.e. those with low capital costs and high load factors

� Such sites can afford to make community benefit payments of £50,000 per MW per year

55

Economics and planning

� Many wind farms are poorly located and designed

� Turbines that are too close together reduce output and accelerate the decline in performance over time

� The major direct impact is noise: in general noise � The major direct impact is noise: in general noise assessments are full of statistical nonsense

� Developers ought to be required to compensate/buy-out any property owner within 2 or 2.5 km of a turbine

� Careful studies (not sponsored by the wind industry) show that visual impacts reduce willingness to pay for properties by about 6% for wind farms within 2 km and 3% for wind farms within 2-4 km

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Over to You

Roundtable

Discussion

Panel

Discussion

Engaging Host Communities ?

- Not Pro or Anti Wind – Pro Community!

Lauri McCusker,

Director of the Fermanagh Trust

Wednesday 16th April 2014

About Us

• Fermanagh’s Community Foundation

• Dedicated to creating a partnership of donors, non-profit making organisations and the community to find solutions to the pressing community needs

• Support community and voluntary endeavours - community and • Support community and voluntary endeavours - community and voluntary sector, good relations, social enterprises

• Range of funds and initiatives – Shared Education, renewable energy and local communities, social enterprise development

• Power of communities

• Social, community, economic or environmental initiatives

Community Development

• Community Voices

• Participation

• Empowerment

• Equality Of Opportunity

• Identifying Local Needs

• Inclusion

• Collective Action

Maximising Community Outcomes From

Wind Energy Developments

Recommendations

• Communities

- A not for profit organisation to take the lead role in establishing good practice guidance including a policy on community engagement and promoting a toolkit on community benefits

- All local communities to take an active role in relation to a wind farm development being considered in their community exploring the range of community benefits which can be provided

- Local community based organisations to examine and where possible develop and implement wind farm developments based on one or more of the community ownership models outlined in this report

Recommendations

• Developers

- Community Benefit Funds - local communities should be offered by developers a minimum initial payment of £2,000 per MW of installed capacity and a minimum annual payment of £2,000 per MW of installed capacity and that payment is index linked MW of installed capacity and that payment is index linked

- Community ownership - developers should consider offering some form of community ownership as part of a community benefits package

- Community engagement – large scale commercial developers should develop clear protocols on effective community engagement for wind farm developments

Recommendations

• Local Councils

- Local Councils to formally establish guidance protocols (based on good practice) which provide a framework for engagement by developers with the Councils and local communities

Recommendations

• Government

- Department of Enterprise, Trade and Investment to actively support local communities and their potential, positive role in implementing wind farm projects and the contribution they make in the development of a low carbon society

- The Department of Agriculture and Rural Development to ensure models of good practice, as evidenced in Scotland and Wales, are followed in relation to both engaging and working in partnership with rural communities and the private sector when developing wind farms on land managed by the Forest Service

- The Department of Enterprise, Trade and Investment to develop a public register of community benefits from wind farm projects similar to that currently being established by the Scottish Government

Recommendations

• Government (cont…)

- A Government Department to take the lead role in developing a more coordinated approach involving the government, the private sector and communities towards wind farm developments, which builds upon principles of sustainable development builds upon principles of sustainable development

Community Ownership

• Full ownership

• Part ownership

• Community/Developer joint venture

• Co-operative

Challenges can include the ability to access finance during the development process, time and commitment from the community, communities often lack the technical or ‘know-how’ to progress a project

However the economic and social opportunities can be huge

Earlsburn (Fintry)

• Village of Fintry in Scotland devised their own proposal for an additional ‘community’ turbine, which brought the site up to 15 turbines

• The community turbine is owned by the village (300 households) and the village will pay this back over the first 15 years of operation . During the first 3 years of the turbine operating, the village gained an income of approximately £230,000

• Revenues from turbine go towards improving household energy efficiency, making a significant contribution to reduce the number of households in fuel poverty

• Taking into account future fluctuations in factors such as wind speeds and electricity prices, it is estimated that the village will receive a profit in the region of £400,000 to £600,000 per annum once all costs have been repaid

Neilston Community Wind Farm

• Shared ownership project between Neilston Development Trust (NDT) and Carbon Free Developments Ltd

• Developer identified, funded and developed project at its own risk. NDT agreed to support the planning application in exchange for an ‘option-to-purchase’ up to 49.9% of the equity if planning consent was granted. If consent was not given, NDT could walk away from the initiative consent was not given, NDT could walk away from the initiative

• NDT achieved 28% of the wind farm equity through equity loans from the Scottish Government and a range of social lenders

• The 28% stake is anticipated to generate a return of more than £10 million to NDT over the life of the wind farm

• Long term income to support projects outlined in Neilston’s Town Charter

Progress on Recommendations

• The Fermanagh Trust has engaged extensively with stakeholders following

the publication of the report. This has included: Government Departments,

district councils, third sector and community organisations and the private

sector

- Communities

- Developers

- Local Councils

- Government – DETI, DARD, DoE. NI Assembly Committees.

Recent Developments

• DECC Onshore Wind Call For Evidence

• DECC Community Energy Strategy:

- Facilitating industry-community models on shared ownership

‘We expect that by 2015 it will be the norm for communities to be offered the ‘We expect that by 2015 it will be the norm for communities to be offered the opportunity of some level of ownership of new, commercially developed onshore renewables projects. We will review progress in 2015 and if this is limited, we will consider requiring all developers to offer the opportunity of a shared ownership element to communities.’

- Shared Ownership Taskforce

- Community Right to Buy In

• DETI, DoE and DARD

What needs to happen next?

• Strengthen community engagement –

including the role of planning system

• Coherent vision

• Put communities at the heart of policy

• Joined-Up Government

• Community ownership

• Financial framework and access to finance

and support

• Community benefit funds

• Community capability and capacity

Concluding Remarks

• Wind energy development can present significant opportunities for local communities

• It is important for communities to actively engage with developers

• There are increasing challenges as a result of the concentration of wind farms

• Government and communities must be proactive:

- Community energy

- Community benefits

- Community engagement

Panel Discussion with Panel Discussion with

political representatives

Final CommentsFinal Comments

Next Steps

Fergal O’Donnell

RCN