Windfarms becalmed by lack of finance and price of oil

The Times (October 18th) and Observer (October 19th) both report that the credit crunch and falling oil prices threaten to hold up some of Britain’s renewable energy projects just as the UK Government has raised its commitment to green electricity. While large projects backed by the bigger utilities are generally thought to be safe, smaller and more speculative developments are facing funding problems as backers adjust their lending criteria or, in some cases, consider withdrawing it altogether. “The debt is just not there,” said John Dupont, head of renewable energy finance in the UK for Nordbank, the world’s largest clean energy financier. “We are still doing deals but the market is very difficult. This could result in a big delay for wind farm projects being developed in the UK.” “The market has definitely tightened,” said Ian Whitlock, a partner at Ernst & Young specialising in UK utilities. “The lending rates over Libor and the covenants on renewable energy deals in particular are being toughened up. The Times reports athat several banks including the Royal Bank of Scotland have dramatically reduced lending activities in the past few weeks and on top of this construction costs have escalated. In an article titled ‘UK wind farms on brink of failure’ John Vidal reports that last week Britain committed itself to cutting greenhouse gases by 80 per cent. This week Gordon Brown will claim the UK is now a world leader in wind power but Vidal reveals his hopes could be blown wildly off course. No country has tried to switch so fast to renewable energy - but rising costs and technical problems mean that, without urgent action and cash, the targets cannot be met. Ten years ago most wind turbines in Europe could barely power 200 homes, but technological advances have been so great that this single seven megawatt (MW) machine, known as the Enercon E-126, should provide nearly 20 million kilowatt hours of electricity a year - enough to power a town the size of Penzance. There are others even bigger being planned in the US, but independent analysts say there is little chance that one of these turbines will be installed in Britain for many years. Many are deeply sceptical, saying that the government should not have put so much faith in wind power without making it easier for the industry to operate. ‘The numbers do not add up,’ said energy analyst Professor Ian Fells of Newcastle University. ‘It is physically impossible for the industry to meet its target. The most that any country has ever built offshore is 350MW in a year. But they need to install nearly 10 times that in 12 years, and most will be far offshore. It means they will have to install hundreds a week. They cannot do it.”.

The UK Government targets are:

2008 - wind to generate 3GW of electricity, enough for several million homes - in 2007 just 5% of all power came from renewables

2010 - revewables to generate 10% of all UK energy (wind to be 60% of this, or 6%)

2020 - renewables to generate 20% of all EU energy

2080 - UK to reduce carbon (greenhouse gas) emissions by 80%

http://www.guardian.co.uk/environment/2008/oct/19/renewable-energy-greenhouse-carbon-emissions