Cleantech Investor

First published in Cleantech magazine 2011 Issue 5. Copyright Cleantech Investor Ltd

By Anne McIvor

The UK's Feed-in Tariff (FiT) regulation came into force for Microgeneration Certification Scheme (MCS) accredited turbines in July – at which point seven turbines were eligible: under the FiT scheme, householders receive 28p for every unit of electricity produced by a wind turbine.

The Government, already under pressure due to the planning disarray surrounding solar PV installations (it had backtracked on plans for an FiT for larger solar installations), came under attack for having permitted a logjam of applications for small wind turbines to build up. One of the most vocal critics was Scottish turbine manufacturer, Proven Energy, which lobbied its constituency MP, Michael McCann, to raise the issue in Parliament at Prime Minister’s Question Time in June of this year. The Prime Minister instructed a representative from the Business Department to meet with the company.

Since then, however, Proven Energy has had more pressing matters to deal with. The company was placed in receivership in September, after having discovered an "acute technical defect" on three of its turbines and being forced to advise all users of its P35-2 "flagship" turbine to brake the systems. It was forced to suspend sales of the P35-2 model, just as the UK small wind market FiT scheme was taking off.

Proven Energy’s troubles resulted in its major investor, Low carbon Accelerator Limited, being forced to write down its investment in the company, in which it had sunk £11.2 million in a combination of debt and equity. The write-down news saw a slump in the Low Carbon Accelerator share price, which fell by 43% in just one day.

The FiT system is expected to underpin the UK small wind market, which was already seeing healthy growth. According to the RenewableUK Small Wind Systems Market Report 2011, UK small wind capacity rose by 65% in 2010 to 14.23MW. The UK market size was estimated by RenewableUK at £29.27 million in 2010, a rise of 70.9% on the previous year.  The report notes a shift in the market towards larger, grid connected turbines, rather than micro turbines – clearly driven by the prospect of the FiT. At the time of the report’s publication in April, the organisation was forecasting market growth of 167% this year – to £78.22 million.

Aside from Proven Energy, Scottish turbines approved under the MCS include the 6kW Eoltec Scirocco, co-developed by Kirkwall company Bryan J Rendall Electrical (BJRE). Meeting the Class 1 standard, this turbine is rated to withstand the extreme wind speeds experienced in exposed areas such as the north and west of Scotland (and is now the only Class 1 turbine eligible for FiTs). The Scirocco is popular on islands, with over 100 installed in Orkney.

Other eligible turbines include the Evoco Energy 10kW model. This turbine was also recently accredited by the Small Wind Certification Council (SWCC), meaning it is now eligible for financial incentives throughout the United States.

The export market is important for UK small wind manufacturers. According to RenewablesUK, 56% of the output of UK manufacturers is exported – while 61% of the UK market is supplied by UK manufacturers.

Wales-based manufacturer, Quiet Revolution, which has developed a vertical axis turbine, has been one of the more successful exporters. Quiet Revolution announced in May that it had reached its 2011 manufacturing capacity and had closed its book, with 105 orders for its qr5 turbine from Ireland, Germany and Australia. The company’s turbine, which has low noise and vibration and incorporates a control system for remote monitoring, achieved MCS approval in the UK in May. Quiet Revolution is backed by RWE Ventures and has received project finance funding from Hazel Capital for qr5 deployment.

There has been a move in Scotland, where Proven Energy is based, to back a bid for the troubled company from another Scottish company, Icon Energy – amidst concerns about ‘asset stripping’ and the implications for Scottish jobs of Proven Energy’s demise. However, in the event, the firm was acquired out of administration by Kingspan Environmental Renewables. In the meantime, the UK is seeing new entrants eager to fill the void.

One newcomer is US OTC Bulletin Board-listed XZERES Corp (XPWR), which recently signed an agreement with Scotland's VG Energy for the purchase of turbines worth at least US$5 million over the next 15 months. However, the arrival of XZERES is not all doom and gloom for the ‘UK green jobs’ lobby: Hutchinson Engineering of Widnes was chosen as the sole supplier of wind turbine towers for the XZERES 10kW turbines, in a £1.2 million contract.

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