New boost for renewables in the UK
by N A Hall-Stride, CADDET UK National Team

This autumn, the UK government made its greatest commitment ever to renewable sources of energy by confirming the 5th round of the Non-Fossil Fuel Obligation (NFFO-5). NFFO-5 is expected to become the first step in the government's new and strong drive to secure additional generating capacity from renewables so that they can contribute substantially to reducing CO2 and other greenhouse gas emissions.

Main photograph: Tyseley 25 MW energy from waste plant.
Top left: Hydro-electric plant on the Manchester Ship Canal.
Top right: Calvert landfill site (courtesy of Shanks & McEwan).
Bottom right: Experimental wind turbine.

Background
Underpinning new and renewable energy technology development in the UK is the government's determination to put environmental concerns at the heart of the decision making process. This thinking is implemented through programmes, including the energy efficiency programme of the UK Department of the Environment, Transport and the Regions (DETR), and the renewable energy programme of the UK Department of Trade and Industry (DTI). Challenging, binding commitments have been made to cut CO2 emissions and it is clear that both energy efficiency measures and new and renewable energy sources can, and will, make a significant contribution to achieving those targets, and to longer-term sustainable energy use both in the UK and internationally.

NFFO-5
NFFO, a guaranteed market for electricity from renewables, has been a very successful, key policy instrument initially designed to ensure progress towards 1,500 MW of new electricity generating capacity, based on renewable energy, in the UK by the year 2000.

Five NFFO Orders have now been completed in England and Wales; two Scottish Renewables Orders and two Northern Ireland NFFO Orders have also been completed. By the end of June 1998, 235 of these projects (25 more than last year) had been commissioned and are now generating 569.9 MW (an increase of 93.1 MW over last year).

NFFO-5, which has been proceeding during 1998, has demonstrated once again the renewable energy industry's ability to develop competitive projects. By September, advice from the Office for Electricity Regulation to the DTI was that 408 projects had been submitted with a total capacity of 2,579 MW. After consideration of the overall balance of technologies, capacity and price, contracts will be awarded to 261 projects totalling 1,177 MW from technologies including landfill gas, waste, waste/CHP, hydro, and wind power as detailed in Table 1.

Table1: Summary of NFFO-5

 Technology

 Landfill gas

 Waste

 Waste/CHP

 Hydro

 Wind
>0.995 MW

 Wind
>0.995 MW

 Total

 No of projects

 141

 22

 7

 22

 33

 36

 261

 Capacity
(MW DNC)

314

416

70

9

340

28

1,177

 Lowest price (p/kWh)

2.59

2.39

2.34

3.85

2.43

3.40

 

 Average price (p/kWh)

2.73

2.43

2.63

4.08

2.88

4.18

2.71

 Lowest price (p/kWh)

2.90

2.49

2.90

4.35

3.10

4.60

 

As well as being the largest Order since NFFO started in 1990, it is also the lowest priced. The Minister said that the price reductions had exceeded expectations and reflected well on an industry determined to make renewables competitive with other sources of energy. Table 2 shows how the average price has fallen dramatically; a 20% fall from NFFO-3 to NFFO-4 and nearly 22% fall from NFFO-4 to NFFO-5. The average price is now only 2.71p/kWh compared with an average pool price of 2.67p/kWh (where p is the UK pence).

Table 2: Summary of previous NFFO Orders

 Order (Date)

 NFFO-1 (09/90)

 NFFO-2 (10/91)

 NFFO-3 (12/94)

 NFFO-4 (02/97)

 NFFO-5 (09/98)

 No of projects

 75

 122

 141

 195

 261

 Capacity (MW DNC)

152

472

 627

 843

1,177

 Average price
(p/kWh)

7.18(1)

7.03(2)

 4.35 (3)

 3.46 (3)

 2.71 (3)

Note (1): max 8 year contract
Note (2): max 7 year contract
Note (3): max 15 year contract

Other initiatives
The announcement of NFFO-5 follows a number of other important initiatives. Firstly, the DTI is currently undertaking a review of new and renewable energy policy, including what would be necessary and practicable to provide 10% of the UK's electricity from renewables by 2010. It has become clear that achieving this will rely principally on contributions from technologies including energy from wastes, wind energy onshore and offshore, and energy crops. The outcome of this review is expected to be announced soon.

Further evidence of the competitive position of renewables also came earlier in the summer with the announcement by the Renewable Generators' Consortium, (representing NFFO-1 and NFFO-2 generators whose contracts expire at the end of 1998) of secure contracts to supply electricity in the open market from January 1999. As deregulation of the electricity market continues, allowing users to contract directly with any supplier, the success of these pioneering renewable energy schemes making the transition to the open market is expected to create new niche markets for renewable energy based generators.

The DTI continues to encourage other renewable technologies not yet included in the NFFO scheme. At the British Wind Energy Association conference in Cardiff in September, the Minister for Energy and Industry launched a consultation document on the arrangements for incorporating the development of offshore wind energy into the NFFO process. Offshore wind energy is seen as the UK's greatest ­ and as yet untapped ­ natural, sustainable and pollution-free resource; support for it could make a substantial cost-effective contribution to future electricity needs.

Other initiatives such as the SCOLAR programme, which aim to install photovoltaic systems in 100 schools and colleges, and British Biogen's wood fuel heating initiative, which aims to demonstrate the viability of wood fuel heating by installing up to 100 MW of heating in commercial and public buildings, will reinforce the role of renewable energy technologies in sustainable development.

For more information contact the CADDET UK National Team.

The CADDET Renewable Energy Newsletter is a quarterly magazine published by the CADDET Centre for Renewable Energy at ETSU, UK.

The articles published in the Newsletter reflect the opinions of the authors. They do not necessarily reflect the official view of CADDET.

Enquiries concerning the Newsletter should be addressed to
Pauline Toole, Editor, CADDET Centre for Renewable Energy, ETSU, Harwell, Oxfordshire OX11 0RA, United Kingdom. Tel: +44 1235 432968, Fax: +44 1235 433595.