renewable eneregy

Sun, Sep 4, 2005

This is the Wee Guide to ROCs.

What are ROCs? Renewable Energy Certificates. However, before we get to them, it’s best to put them in context. For they’re really just sticking plasters we’re using to cover small scratches in our environment. Scratches that will grow to become open sores that no amount of ROCing will soothe.

The United Kingdom government must cut carbon dioxide emissions by 60% by 2050 [1] and the government have decided that, rather than us, the polluting populace pay the price, the environment will pay instead. The real problem is our voracious consumption of energy. Well, not really. It’s the way we generate the energy we consume. Giant puffing power stations. The first attempts to move into renewable energy were the hydro power schemes of the Scottish Highlands, where entire glens were flooded. Mountain corries were concreted and damned and giant piplelines layed above ground over the hills. The scheme was inspired by the Norwegian model but the instigators failed to notice that the hyrdro schemes in Norway were fed by glaciers. Scotland does not have glaciers and hence no reliable source of hydro energy. So the glens became giant “capacitors” or liquid batteries which were used in times of heavy demand, rather than energy supplies in their own right. They were used when, for instance in the days when the Scottish national football team could score goals, during half time, the few million people watching the game would make a rush for their kitchen to switch on the kettle for a cup of tea. The Gaelic word “coire”, which we know in English as corrie actually means “kettle”. How ironic is that? The phrase “Dying for a cuppa” takes on a whole new meaning when applied to the environment.

So now we have giant puffing power stations and a modified geography and still we consume more and more energy. Millions of televisions, video recorders, DVDs that are permanently in standby when not in use. Large internet server farms drawing continuous power round the clock. Even in the mountains we consume energy with mobile phones and GPS units. We’re a power hungry society and we’re not about to change our lifestyles to reduce that dependence. Not even when studies show things such as LED traffic lights which “reduce energy consumption by over 75 percent and have a life span of more than ten times that of conventional signal lights” [9].

Now, the south of England has a large energy deficit whereas the north of England has a large surplus [8], so you would think it would even out, with the north supplying the south, not to mention any power that can be imported via the French and Scottish interconnectors. However, due to Kyoto, the UK must start producing more and more of it’s energy through sustainable, renewable means. 3% in 2003 - 10.4% in 2010 [2]. Flow of such “green” energy from France, via the interconnector isn’t an option. The UK can’t dictate how it’s power is generated outwith it’s shores. So, step forward Scotland and the highlands in particular. We’ve already endured Dounreay [10] and it’s fallout, literally [11] and the flooding of the glens, and now we’re becoming the UK’s green energy factory, with wind farms in particular becoming the new conifers, which turned the Scottish hills into monocultural wastelands in the 1980s under the banner of tax evasion for celebrities.

“The wind is a free, clean and renewable fuel which will never run out” [6] Oil and gas are free and clean too. It’s what you do with the “fuel” or how you exploit it that counts. You burn oil and gas, which produces pollution, so they’re dirty. Turbines just sit there turning in the wind, no pollution, so they’re green. Or are they? A future article will deal with this misconception.

One of the most visible reasons for using wind is it’s “free”. Wind is “clean”. Wind isn’t clean. It brings pollution from the continent. It’s the way of generating electricity from the wind that is “cleaner”. Cleaner for the atmosphere but not for the biosphere [7].

So where do ROCs fit into all this?

To harvest the wind and turn it into useable energy, to power the nation’s kettles, you need money. Money to buy the technology to harvest the wind and to turn it into electricity. Money to maintain that technology. Money to pay off the loans you got to buy the technology.

The money you get from selling the electricity to the distribution companies doesn’t cover the costs of generating it. It’s a loss making enterprise and no business worth it’s salt will touch it. We can use the Hoyle Farm offshore wind farm, off the coast of Wales, as an example. It costs 70 pounds to generate a MWh of electricity from the farm [4]. The main power companies don’t buy at this price and hence the farm makes a massive loss and renewable energy becomes financially impossible to sustain. Enter ROCs.

When a wind farm such as Hoyle Farm goes online, it’s owners registers it with the government as a bona-fide renewables generator. The government agrees and issues them with Renewable Energy Certificates (ROCs). Then, when the power company, which is essentially being forced to buy electricity from the renewable generator, consumes the output of the wind farm, the renewables’ owner can wave a ROC at them and have them buy it. The current market rate for buying ROCs is around 45 pounds per MWh (July 2005) [5]. The power company could also just say “no thanks” and choose to buyout instead. This lets them “buy out” of the renewables obligation, under which they are legally required to source a percentage of their electricity from places such as Hoyle Farm. Rather than buying a market inflated bit of paper, they can just pay money to the renewables fund instead. The current buyout price at the moment is around 30 pounds per MWh [3].

So you see ROCs are good for the producer of renewable energy. They currently pay for more than half of the generating costs. They’re not so good for the consumer but they have a get-out clause in the form of the buyout, which is cheaper for them. So it’s in the consumer’s interest to always use the buyout, as it’s cheaper and therefore ROCs would become meaningless over time. Hence there are ROC traders, who use the markets to inflate the price of ROCs and they trade as normal shares would.

So what seems a good idea on paper, a certain percentage of electricity generated from renewable sources has turned into a money grubbing stockmarket led farce. The big electricity companies have to buy this uneconomic power and we, the taxpayer are subsidising them to do so, in the form of ROCs, which the government distributes on our behalf. So we pay twice for such electricity. We pay at the point of consumption and we pay at the source too. Into the bargain, we lose vast tracts of wild land to wind farms [12] [13] [14] [15] [16] [17] as well as the distribution infrastructure that comes with increased generation on previously fallow sites [18].

In an increasingly frenetic, crowded and stressful country the highlands of Scotland are once again between a ROC and a hard place.

References:

[1] http://www.rcep.org.uk/news/00-2.htm [2] http://www.dti.gov.uk/renewables/renew_2.2.1.htm [3] http://www.bwea.com/business/roc.html [4] http://www.guardian.co.uk/renewable/Story/0,2763,1090109,00.html [5] http://www.nfpa.co.uk/ [6] http://www.bwea.com/ref/econ.html [7] http://www.mountaineering-scotland.org.uk/windfarms/factories.html [8] http://www2.env.uea.ac.uk/gmmc/neta/moscow_2004_final.ppt [9] http://www.naesco.org/industry/news/2005-05.htm [10] http://news.bbc.co.uk/1/hi/scotland/4749321.stm [11] http://news.bbc.co.uk/1/hi/scotland/4384435.stm [12] http://www.mwtlewis.org.uk/prodev.htm [13] http://www.amec.com/wind/2ndlevel.asp?pageid=8118 [14] http://www.scottish.parliament.uk/business/committees/enterprise/inquiries/rei/ec04-reis-morrisj.htm [15] http://www.jmt.org/policy/dunmaglass05.html [16] http://www.guardian.co.uk/comment/story/0,3604,1425696,00.html [17] http://www.whfp.com/1603/main.html [18] http://www.hbp.org.uk/

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