Wind power to the people!
Written by Jerome
Wind power is not just about large-scale wind farms. Small wind turbines installed by farmers, schools or communities offer a chance to live green and earn an income from it. A small wind turbine is not just the ultimate in low impact living or experiential environmental education. If you have enough wind, making money out of thin air is a real option!
Wind turbines can be small scale too
The energy industry has always been just that, industry, big business. Power production in the hands utility companies means huge centralised power plants churning out gigawatts of electricity day and night. The power is sold to the consumer and the profits go to the power companies. Large-scale wind power has followed the same route replacing dirty, polluting fossil fuel stations with clean but large and, according to a small but vocal minority, intrusive wind farms. I happen to disagree on the intrusive, but I may be biased!
This does not have to be the case! If we are to reduce power consumption and pollution to environmentally sustainable levels we all have to contribute to these targets. Energy efficiency and utility purchase from renewable energy suppliers are key aspects of this process. Power from renewable suppliers can cost you no more than your standard grid provider; energy efficiency can save you money. If saving money was not enough of an incentive small wind power offers anyone with a piece of land the next stage; making money out of shifting to a greener lifestyle.
Profits from wind turbines for communities, farms and schools
Over the last few months much legislation has changed around the planning permission for small turbines and the selling of power back to the grid making the whole process much more accessible and viable.
The economic case for schools, communities and farmers is now incredibly attractive. With up to 50% grants available from the government Clearskies programme; valuable emissions trading certificates awarded for every unit generated; the ability to sell excess power back to the grid and massive increases in power costs, it is now possible in some cases to recoup the cost of purchase and installation of a small turbine in under 5 years! With low maintenance turbines designed to last 20 years that leaves 15 years of steadily increasing income generation and savings as the cost of grid electricity climbs.
Wind power has always been a community or farming technology. The first windmills invented in Persia (modern day Iran and Afghanistan) in the 7th century AD were used for grinding flower and irrigation. Flower mills used to sit atop every hill in the UK. As the use of wind power has changed with the demands of society similar technology that was used for mechanical work can now be used to generate electricity where it is needed, for farms or community use.
The company I work for, Iskra wind turbines, produces the AT5-1 turbine. Our 5kW turbine sits on a tower anywhere between a 12 and 25 m high and has a rotor diameter of 4.8m. Compared with a wind farm scale turbine it is a small piece of machinery. (see picture)
Planning laws for wind turbines
Until this year planning laws did not differentiate between giant wind farm scale turbine and the sort of utility scale, farm machinery type turbines produced by Iskra. Turbines were either tiny battery charging units seen on yachts or immense power generating units installed by utility companies. This made it very difficult for small generators to get planning permission. In the last few months a piece of national planning policy (PPS22) has laid out clearly the distinctions, making it harder for planners to turn down small turbine applications. We have already had several successful applications using PPS22.
Clearly assessing the economics is all-important when deciding whether to invest capital in an expensive piece of kit like a wind turbine.
There are 3 ways a turbine can pay for itself
Money saved through reducing consumption of another purchased energy source usually grid power though sometimes diesel, oil or gas.
Money made by selling power back to the grid.
Money made from the sale of tradable certificates, which you earn from the government, because you are generating renewable power.
1. Wind instead of another source.
The major benefit of wind over any other power source is that once you have paid for the turbine there are no further running costs bar a yearly check up and grease.
If you buy a generator you need to pay for diesel (about 22-25 pence per kilowatt-hour/unit). If you are on the grid you must pay for electricity (about 7.5p per kWhrs/units). The wind is the fuel for the turbine and it is free.
If you use the electricity as it is produced, i.e. the wind blows while you are watching television, you will be saving this expense.
Off the grid sites are often quoted incredibly high costs by power companies for connections to grid power. In these cases this can be avoided, immediately making wind power economically viable.
2. Money made by selling power back to the grid.
The laws governing who can generate and export back to the grid and how much they can generate have very recently been changed. It is now possible for an owner of a small turbine to purchase and run a relatively cheap export meter for small generators called a non-half hourly, NHH meter, similar to your domestic supply meter. The meter costs the turbine owner about £50 per year to operate. There are electricity companies that will buy any excess that you generate. The best price Iskra have seen is from a company called Green energy that will pay 3p per unit for the electricity in autumn and winter months when there is a high demand and also luckily lots of wind!
To export in this way a contract must be signed between the electricity company and the generator, where by the generator will buy from the supplier when they need electricity i.e. on non-windy days, and the supplier will buy from the generator when there is excess. The generator will also need to get the OK to attach to the grid from the company that maintain the grid infrastructure in their area; the district network operator or DNO. Usually the DNO will just say fine go ahead once notified.
3.Money from the sale of tradable certificates.
Worldwide, governments are trying to encourage a market in carbon and pollutant emissions to increase the value of renewable technologies and generation, giving financial incentives to clean generators and consumers and taxing polluters. This is all part of the attempt to meet Kyoto targets for reductions in greenhouse gasses. This good news for small generators, if you register with OFGEM as a generator you receive these certificates whether you use the power yourself or not, you can then sell them on. There are two major schemes that are relevant to turbine owners.
a. Renewables obligation certificates. ROCs
Power companies must produce a certain amount of their power from renewables. To prove they have done this power companies get issued ROCs for every unit they produce in this way. If power companies do not have enough ROCs at the end of the year they are penalised. As you can imagine they are quite keen to get their quota.
As a small generator, if you register with OFGEM, you can also receive ROCs. All you need to do to receive your quota is to send a photo of your meter, with the daily paper, to OFGEM each month and they will send you the certificates.
1 ROC is presented for every megawatt hour (1000 kW/units), their value fluctuates with the market demand. Visit http://www.nfpa.co.uk for the latest prices. The variation has been between 5.2p per kW/unit and 4.7p kW/unit in the last 2 years.
10 November 2004
21 July 2004
20 April 2004
20 January 2004
21 October 2003
16 July 2003
15 April 2003
16 January 2003
17 October 2002
b. Levy Exemption Certificates or LECs
Companies and statutory organisations, like schools, consume a lot of power. If they buy power from renewable sources they pay less energy tax (levy) than from non-renewable sources. For every kW of power they obtain from Renewable sources they gain levy exemption certificates. Not enough certificates-more tax.
As a generator you receive certificates for every megawatt you generate these are currently trading at about £5 per mWh or 0.5p per kWh.
Making it easier
This all sounds complicated and heavy on the paperwork, and it can be. There are however brokers and agents that will do all the paperwork, monitoring and trading for you. They will take a cut obviously, but it does then leave you able to sit back and just wait for the cheques. One broker we have identified is Trade link solutions (http://www.tradelinksolutions.com), there are sure to be others.
Adding it up
Take a couple of examples:
Best-case scenario: If you use all the power yourself replacing grid power at about 7.5p per unit, plus you will earning ROCs and LECs with a total value of 5.5p per unit. To get the full value you opt to sell these yourself and do all the paper work rather than using a broker.
Remember also the turbine has a 20 year design life. Electricity prices will go up with inflation; domestic fossil fuel resources are running out and higher international demand for other fossil fuel stocks will substantially improve the payback time over those years. These factors have not been taken into account in these simple examples.
Value per kW
Power yield per year
Turbine cost after £5K grant
50% Community grant
Worst- case scenario: If you export all your power to the grid and sell it back to a power company at 3p per unit. You still get paid ROCs and LECs but go through a broker with a fixed price of 3p per unit. Remember again that the turbine has a 20-year design life and Electricity prices will go up, and this has not been included.
Value per kW
Power yield per year
Turbine cost after £5K grant
50% Community grant
Most people will be somewhere between these two scenarios, generally opting to use a broker to deal with the Certificates and export issues, generating 6p a unit when they are not using the power and 10.5p per hr when they are using the electricity. The broker takes a cut on the sale of the certificates but also does all the complicated paperwork and selling which can be time consuming for a small producer. Just less than 10 years is the average payback at current energy prices.
Wind power has really has come of age again. Like good fashions and music it was only a matter of time before something as eminently useful as wind power was rediscovered and put back to work by a new generation. I just hope there are not too many people kicking themselves when their electricity prices are soaring and the government grants have run out!