Blake Lapthorn green breakfast with Gregory Dix, Associate Director of Savills

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Blake Lapthorn solicitors welcomed Gregory Dix, Associate Director of Savills as its first speaker in the fifth green breakfast series.

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  • Welcome Who I am Coconuts I’m going to give a brief background to the state of the UK energy market today and in 10 years time Then I’m going to explain about the incentives for renewable energy Then a look at 3 technology types
  • There are 2 Main Drivers for growing the renewable energy industry in the UK today. The first is Climate change There is global consensus that climate change needs to be tackled. The EU has set targets to reduce emissions, which are a 20% reduction in carbon emissions and 20% reduction in energy use (i.e energy efficiency) and a 20% use of renewables by 2020 across Europe as a whole The UK has its own targets to reach in agreement with the EU which I will briefly cover.
  • The EU Renewable Energy Directive requires the UK to obtain 15% of its total Energy Consumption from renewable sources by 2020 and the UK has committed to reducing its carbon emissions by 34% as well. The Govt has set out The UK Low Carbon Transition Plan National strategy for climate and energy This covers all energy sectors, electricity, heat, and transport. Shortfalls could be subject to heavy penalties (although the 2009 directive doesn’t state this implicitly) Currently the UK is only at 3% of its target for 2020 – 2 nd from last after Malta………… To meet the 15% we need to have 30% of our electricity generation coming from renewables. We need a 12 fold increase on a renewable heat production and a 7 fold increase on transport (i.e biofuel).
  • 2nd Driver- Security of Supply
  • The Position Today we have A balanced mix of GAS, COAL AND NUCLEAR with very little supported by renewables.. If we look forward to the future in 2020 It is proposed that we have a balance between gas, coal and renewables – but we have been a net importer since 2004 so presents a big problem to security. Nuclear is ALL BUT GONE Meanwhile, power demand/consumption continues to increase
  • The UK is potentially facing a huge energy crisis This is not scaremongering it is fact. 9 oil and coal fired power stations are due to close by 2015 because they have come to the end of their design life 4 nuclear power stations are due to close a year later. The regulator predicts blackouts by 2016 National Grid forecasts we will have to import three-quarters of our gas by 2015
  • This slide shows our actual consumption of energy, projected future demand and the source of home produced fuel. We became net importers of energy in 2004. BOEPC stands for barrels oil equivalent per capita ENERGY USE CONTINUES TO INCREASE whilst our HOME GROWN UK PRODUCTION FALLS AWAY A SERIOUS WIDENING GAP until NEW NUCLEAR COMES ON STREAM IN C> 2025 but even this is in doubt because coalition are proposing no subsidies are being offered to kick start nuclear Renewables have role in filling this gap in a country that has excellent renewable sources of energy So what's the UK Govt doing about it?
  • Various incentives have been introduced: Non Fossil Fuel Obligation introduced in the 1990’s Renewable Obligation Certificates under the Renewable Obligation Order in 2002 FIT’s RHI These Govt Incentives often referred to as govt subsidies but really INCENTIVES introduced by GOVT and NOT SUBSIDY THAT THE GOVT PAYS.
  • Shows the changing incentives for Wind Energy
  • Betz law states that we can only capture 59% of the power in the wind. In reality, most turbines at best manage 40% and smaller turbines are doing well to produce greater than 30%
  • But wind turbines can fail – blade breaks
  • PV Planning we hope will be easy but nobody really knows – low impact compared to wind – but might be an issue on valuable arable land Technology is very well proven and established (small amount of degradation over time, but only 0.5% per annum Outputs – downside is outputs are low. 2MW wind turbine produces the same as 25 acres of PV! Returns are at best marginal, but a safe bet over the long term
  • PV Planning we hope will be easy but nobody really knows – low impact compared to wind – but might be an issue on valuable arable land Technology is very well proven and established (small amount of degradation over time, but only 0.5% per annum Outputs – downside is outputs are low. 2MW wind turbine produces the same as 25 acres of PV! Returns are at best marginal, but a safe bet over the long term
  • PV Planning we hope will be easy but nobody really knows – low impact compared to wind – but might be an issue on valuable arable land Technology is very well proven and established (small amount of degradation over time, but only 0.5% per annum Outputs – downside is outputs are low. 2MW wind turbine produces the same as 25 acres of PV! Returns are at best marginal, but a safe bet over the long term
  • PV Planning we hope will be easy but nobody really knows – low impact compared to wind – but might be an issue on valuable arable land Technology is very well proven and established (small amount of degradation over time, but only 0.5% per annum Outputs – downside is outputs are low. 2MW wind turbine produces the same as 25 acres of PV! Returns are at best marginal, but a safe bet over the long term
  • PV Planning we hope will be easy but nobody really knows – low impact compared to wind – but might be an issue on valuable arable land Technology is very well proven and established (small amount of degradation over time, but only 0.5% per annum Outputs – downside is outputs are low. 2MW wind turbine produces the same as 25 acres of PV! Returns are at best marginal, but a safe bet over the long term
  • Different turbine types for different flow and heads. Cross flow turbines typically work well with low head schemes but equally the Archimedes reverse screw turbine is gaining popularity and works well with low head sites were other small scale hydro schemes wouldn’t be economically viable. Critical aspect is the consideration of the head and flow rate – with high heads sites a Pelton turbine would be a better choice as it has a high generating potential. Capital costs of the development must be considered, and are very site specific, with large variations in costs when compared against Wind turbines and PV.
  • Very low capital costs have made the development of a crossflow hydro turbine at this existing mill site very attractive. Attracts 22.8 pence per kWh
  • Attracts 20.8pence per kWh Has suffered from the impact of drought restrictions almost halving output.
  • High Head scheme Actual output April 2009 – March 2010
  • PLANNING – conflict between Govt trying to push for rapid development of renewables whilst at the same time legislating for more localised planning decisions. Often difficult, with many failures for large scale projects. Some of the best areas of the country for wind or solar are no go areas, because of land designations such as AONBs, National Parks, Heritage Coastline etc. The impact of PV on high grade agricultural land may be a consideration as well as visual such as Poly tunnels. GRID – The UK IS NOT SUITED TO LOCALLY EMBEDDED GENERATION. Large scale developments often require £Millions to get grid connection due to capacity issues. Smaller scale developments become uneconomical due to costs of connection. The DNOs (district network operators) are slow to respond to connection and feasibility queries and will often take advantage of developers in regards to grid reinforcement. Network plans are difficult to obtain and DNOs can take 6-9 months to respond to technical issues. TECHNOLOGY – renewable energy generation is in many cases in its infancy. Wind, PV and Hydro well established on large scale developments, but smaller scale suitable technology has not been proven in many instances. Failures of plant are common place and real output figures instead of theoretical outputs are difficult to obtain. FEED STOCK – often underestimated how difficult to secure long term contracts, without which lending can be a problem. Fluctuating prices also make economic viability difficult to establish FINANCE – the lack of liquidity in the market for any form of development has hit renewables just as hard as other main stream developments.
  • Blake Lapthorn green breakfast with Gregory Dix, Associate Director of Savills

    1. 1. Renewable energy opportunities for landowners <ul><ul><li>Gregory Dix 2010 </li></ul></ul><ul><ul><li>The UK Energy Market </li></ul></ul><ul><ul><li>Incentives </li></ul></ul><ul><ul><li>Opportunities </li></ul></ul>
    2. 2. Drivers <ul><ul><li>Climate Change Concerns </li></ul></ul>
    3. 3. Renewables <ul><ul><li>20% EU Target for Renewables by 2020 </li></ul></ul>UK’s Target is 15% of Total Energy Mix from Renewables by 2020
    4. 4. Drivers <ul><ul><li>Security of Supply </li></ul></ul>
    5. 5. UK Electricity Mix Uk Low Carbon Transition Plan 2009 Office Of National Statistics 30 th Sept 2010
    6. 6. Security of Supply
    7. 7. Tomorrow Courtesy of (Dr) Euan Mearns, University of Aberdeen, and The OIl Drum
    8. 8. Government Incentives <ul><ul><li>Renewable Obligation Certificate System </li></ul></ul><ul><ul><li>Feed in Tariffs </li></ul></ul><ul><ul><li>Renewable Heat Incentive </li></ul></ul>
    9. 9. <ul><ul><li>Example of the Changing Mechanism in ££££s </li></ul></ul>Incentives ROC value assumed to be £60 per MW of generated output *Assumes 40MW of generation **Assumes 464MW kWh of generation *** Assumes 4,000 MW of generation 0% £240,000 £240,000 £240,000 2MW*** 400% £87,232 £20,880 £20,880 250kW** 511% £10,680 £3600 £1800 10kW* Growth In Income April 2010 ROC/FIT April 2009 ROC Jan 2009 ROC* Scale Wind
    10. 10. Feed in Tariffs Technology Scale 1/4/2010 1/4/2010 1/4/2010 Tariff Lifetime 31/3/2011 31/3/2011 31/3/2011 years
    11. 11. <ul><ul><li>3 Potential Income Streams / 3 Scenarios </li></ul></ul>Basic Income 8,000 kWh Generation 22,000 kWh from electricity supplier 22,000 kWh Export 30,000 kWh Generation 0 kWh from electricity supplier 30,000 kWh On site usage 30,000 kWh from electricity supplier 30,000 kWh Total Generation 30,000kWh @ 26.7p =£8,010 8,000 kWh @ 10p =£800 22,000kWh @ 3p =£660 Total income =£9,470 30,000kWh @ 26.7p =£8,010 30,000 kWh @ 10p =£3,000 Total income =£11,010 30,000kWh @ 26.7p =£8,010 30,000 kWh @ 3p =£900 Total income =£8,910 30,000 kWh from electricity supplier 30,000 kWh Export 30,000kWh @ 26.7p =£8,010 8,000 kWh @ 10p =£800 22,000kWh @ 3p =£660 Total income =£9,470 30,000kWh @ 26.7p =£8,010 30,000 kWh @ 10p =£3,000 Total income =£11,010 30,000kWh @ 26.7p =£8,010 30,000 kWh @ 3p =£900 Total income =£8,910
    12. 12. Scale 80m 30m 18m 9m
    13. 13. Wind Turbine Examples 11kw Turbine Height 18m – 25m to tip Output at 6 m/s aws c. 35,000 kwh
    14. 14. Wind Turbine Examples 250kw Turbine Height 25m> 40m+ to tip Output at 7 m/s aws c. 656,000 kwh
    15. 15. Wind Turbine Examples Large Scale –i.e Reading 2MW Height 85m 120m to tip Output 3,200,000 kwh (2007 data)
    16. 16. <ul><ul><li>Wind! </li></ul></ul><ul><ul><li>Ideally a minimum of 5 m/s </li></ul></ul><ul><ul><li>The energy in the wind increases on a cubic basis </li></ul></ul><ul><ul><li>i.e 4 m/s gives you 64 units of kinetic energy but 5 m/s gives you 125 units of kinetic energy and 6 m/s give 216 units etc </li></ul></ul><ul><ul><li>To calculate the potential power in the wind that we can convert into power from a wind turbine we take: </li></ul></ul><ul><ul><li>The windspeed 3 x density of the air x area of our turbine x 0.5 = power generation (theoretical) </li></ul></ul>Fundamentals
    17. 17. <ul><ul><li>Wind Measurements </li></ul></ul>Fundamentals
    18. 18. Site Finding
    19. 19. Wind Turbine Examples 11kw Turbine Height 18m Output at 6 m/s aws c. 35,000 kwh Cost c. £57,000 Payback c. 5.2 years Carbon Reduction: c. 16 tonnes IRR: 18.81% NPV: £81,000
    20. 20. Wind Turbine Examples 250kw Turbine Height 25m+ Output at 7 m/s aws c. 656,000 kwh Cost c. £553,000 Payback c. 4 years Carbon Reduction: c. 328 tonnes IRR: 25.53% NPV: £1,237,309
    21. 21. Photovoltaics <ul><ul><li>Monocrystalline – most expensive, but best performance </li></ul></ul><ul><ul><li>Polycrystalline – not as efficient, but cheaper. More panels required to produce the same power output so can directly effect the amount of space you need. </li></ul></ul>Thin Film – currently not very efficient, but cheap and could be applied anywhere
    22. 22. Photovoltaics PVGIS © European Communities, 2001-200 8
    23. 23. Photovoltaics
    24. 24. Photovoltaics
    25. 25. Photovoltaics 950 ------ 15.8% ------
    26. 26. Photovoltaics Total income if PV receipts invested into standard savings account at 4% £69,058 Total income if £18,200 invested into standard savings account at 4% £45,518
    27. 27. Hydro <ul><ul><li>Hydro </li></ul></ul><ul><ul><li>Head and Flow </li></ul></ul><ul><ul><li>Flow – Metres Per Second </li></ul></ul><ul><ul><li>The volume of water flowing is critical </li></ul></ul><ul><ul><li>Head – The vertical drop or pressure/force acting on the turbine from the water intake. </li></ul></ul><ul><ul><li>The head of water is more important than the flow, as there is typically not enough energy even in a fast flow to generate power. The head creates the energy. </li></ul></ul><ul><ul><li><10m Low Head, 10-50m Medium Head, 50m+ High Head </li></ul></ul>
    28. 28. <ul><ul><li>Hydro Monitoring </li></ul></ul><ul><ul><li>Best left to a specialist hydro consultant who should be able to provide an initial desktop based appraisal using data they hold for a particular rivers flow rates and estimated likely head achievable. </li></ul></ul><ul><ul><li>Should be able to ascertain if there are environmental designations that may make obtaining an abstraction licence difficult. </li></ul></ul><ul><ul><li>A desktop study would be followed up (subject to a suitable site) with an onsite visit from which budget costs can be prepared. </li></ul></ul>Fundamentals
    29. 29. Fundamentals Archimedes Reverse Screw Turbine – suitable for very low head schemes <ul><ul><li>Hydro – Different installation types </li></ul></ul><ul><ul><li>Cross Flow Turbines, typically used with Low Head hydro schemes. </li></ul></ul><ul><ul><li>Pelton Turbine – most efficient, ideal with High Head schemes </li></ul></ul>
    30. 30. Hydro Examples Small Scale – <15kW Example: Gants Mill, Somerset 12kW installed 2003 Output anticipated c. 30,000kWh Cost c. £25,000 Payback c. 3 years (if installed today) Carbon Reduction: c. 15 tonnes Annual Income c. £6,870 plus indexation
    31. 31. Hydro Examples Small Scale – 70kW Example: Torrs Hydro New Mills Output anticipated c. 257,000kWh Output actual 141,000kWh Cost c. £226,000 Payback c. 8 years (if installed today) Carbon Reduction: c. 25 tonnes Annual Income c. £29,000 plus indexation
    32. 32. Hydro Examples Large Scale 100kW plus Roshven Hydro Station 490kW Output – c. 1,420,000 kWh Cost c. £700,000 Payback c. 4-5 years ( if installed today) Carbon Reduction: c. 700 tonnes Annual Income £198,000 plus indexation
    33. 33. Constraints <ul><ul><li>Planning </li></ul></ul><ul><ul><li>Grid </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Feed Stock </li></ul></ul><ul><ul><li>Finance </li></ul></ul>

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