Picking up speed: is the time right to invest in small wind?

The small wind industry has been running for over 30 years in the UK and has seen significant growth in recent years. Between 2005 and the end of 2008, over 10,000 micro and small wind turbines were installed in Britain. Yet, given that 40 per cent of all wind capacity in Europe is produced here and there is a potential market of over two million UK businesses looking to save money on their energy bills, the question is why has the take up been as slow as it has?

Indeed, according to the British Wind Energy Association (BWEA), small wind systems have the potential to deliver 1.3 gigawatts of UK wind capacity by 2020, but currently account for just over 20 megawatts. Alex Murley, BWEA Small Systems manager, is in no doubt that what is needed now is “action to increase deployment in the UK.”

Capital outlay combined with few Government grants for business, a lack of awareness and understanding of the technology and a complex Renewable Obligation Certificate (ROC) system have all been blamed for making the process unattractive to embark on upon for the majority of UK businesses – those small to medium-sized enterprises (SMEs) for which energy is not their core business.

“Installing renewable technologies to reduce business energy consumption is a new industry and is therefore not mature,” says Philip Wilson, managing director of Slipstream Energy, a turbine manufacturing company specialising in the urban environment and based in Yorkshire.

He says UK businesses – and SMEs in particular – are only really now beginning to take action to reduce their energy consumption and carbon emissions, meaning the sector has still got enormous potential for growth.  “The take up for [small] wind turbines is set to double year on year for the next 10 years,” says Wilson.

Murley agrees. “It is fair to say that energy use and generation is fast becoming a board room level issue and we are seeing more commercial organisations looking to generate their own clean green energy,” he says.

The introduction from April 1 of double payments for electricity generated for small wind turbines under the green energy certificate programme, ROC, is certainly expected to help take up going forward. This means that a business that has invested in a small wind turbine will now qualify for two ROCs (each carrying a value of £35.76) from a licensed electricity utility company for every megawatt hour (MWh) of eligible renewable energy generated.

The UK small wind sector is certainly doing well. UK manufacturers hold 82 per cent of the domestic market share and figures due to be released later this month at the first UK-based International Small Wind Conference, organised by the BWEA and the Building Research Establishment (BRE), are expected to show a doubling of export revenues for the sector compared to 2007.

Nevertheless, plenty of barriers still remain in the domestic market. The price of small wind turbines depends on the size and type of model bought, but according to the Government's Clear Skies grants programme, a typical small system costs between £2,500 - £5,000 per kW capacity installed. The Carbon Trust does provide interest free loans for businesses looking to invest in small wind systems, but there are currently no grants available for the private sector.  

Then there’s the question of whether the system will work efficiently. Wilson says preparation is the key to effective power generation and for many SMEs small wind will not be a suitable technology to install.

“Wind by its very nature is different in different locations and it is vital to have the right turbine technology installed in the most opportune place. Only a percentage of UK SMEs will be suitable and have the requirement to install renewable technologies,” he says.
 
Many SMEs are situated in built-up areas with gusty, turbulent wind; traditional turbines do not perform as well in these conditions as they are designed to operate in free flowing air conditions, but the technology has advanced so that urban wind can generate power more efficiently.

“For a small business, running a 20 person office with IT equipment, a 6kW turbine could reduce their energy consumption by about 10 per cent,” says Wilson, but he adds that any SME considering small wind technology needs to first look at the number of kilowatt hours it is consuming in a year and then at the number of kilowatt hour a potential turbine will produce in a year.

“At any proposed site, we look for a wind speed of 5.7m/s as starting speed to make a turbine effective with a minimum requirement of 5m/s,” he explains.

Wilson also advises that businesses pay for professional advice on location and technology, which will cost between £400 and £1000, and to keep in mind that wind turbines need planning permission. “By keeping the turbine less than 15 metres high means a simple planning application should take between three and four months,” he says.

But even if the location and technology are right for a small wind turbine installation, many companies are put off by the ROC system. Gaynor Hartnell, director of Policy at the Renewable Energy Association, says: “The ROC system is far too complicated for a business where energy is not their core business. However, 2010 will be a decisive year for the uptake of small wind technology by SMEs with the introduction of the ‘Feed-in Tariffs’ legislation.”

The Feed-in Tariff, already implemented in parts of Europe, means anyone generating their own electricity on site can send any surplus back to the national grid, and establishes a fixed, premium price at which a utility must “buy back” excess generation from the renewable source. This price is higher than the utility charges for its centrally generated electricity (i.e. from coal and gas powered stations).

“The Feed-in Tariffs should replace grants and be more straightforward in delivering the right kind of incentive, as an output based reward programme,” says Hartnell. “ We would expect the take up of renewable technology to really gather pace when Feed-in Tariff comes in.”

Initiatives such as the Zero Carbon Building Programme (ZCBP), commencing in 2016 is set to stimulate the market further. The ZCBP market alone is expected to be worth £2.3 billion and the small wind energy sector will make up £200 million of this market by 2016, according to figures published by the Renewable Advisory Board.

For those working in the sector, the future for small wind technology looks positive – and UK businesses have a big part to play in it. “There is good demand for small wind turbines at present,” says Wilson. “Businesses understand that there is a good payback in the longer term; it reduces their bills and the amount of energy they use. Plus, businesses that don’t use renewables will not only lose a competitive edge through their energy consumption, they will be left behind as consumers look for goods and services that are produced in a green way.”

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