However, grid access is now much less of a barrier after rules were introduced last August that allow wind farms to hook up to the grid before reinforcements have been built. The previous "invest then connect" approach only allowed new generating capacity to connect after the network had been upgraded to accommodate the maximum level of output from the project. Under the new "connect and manage" rules, system operator National Grid will manage the network more actively, constraining generation at times of congestion until the planned grid reinforcements are built.
Connection dates for around 5.5GW of projects - both consented and in development - have now been brought forward by as much as seven years, says Nicholson.
Money matters
But he warns that high connection costs and charges for using the transmission system presents a big barrier for some projects - particularly in the islands and remoter parts of northern Scotland. He also points to the £4.7 billion (EUR5.5 billion) needed to rewire the UK as proposed by government advisers the Electricity Networks Strategy Group (ENSG), and in particular the planned north-south HVDC subsea cables that will take renewable generation from Scotland to England and Wales. How the £1.5 billion cost of these links is to be allocated adds more uncertainty over network charges for projects - particularly in Scotland, which will bear the brunt of the cost. This uncertainty is making projects difficult to finance, he says.
Energy regulator Ofgem has reviewed the way costs for using the grid are shared between network users. The current charging regime encourages generators to locate close to areas of high demand for electricity. But if the UK is to meet its low-carbon targets, an increasing amount of renewable generation will need to be connected in the islands and remote areas, where charges can be up to 20 times the average charges in Britain.
Among the island projects anxiously awaiting the outcome of Ofgem's review - due this spring - is the Muaitheabhal wind farm on Lewis in Scotland's Western Isles. The 120MW project, sited on the Eisgein estate, is being developed by a group of investors known as Beinn Mhor Power. A 13MW slice of the project is to be owned by the local community. The project was consented in January 2010 and has been offered grid connection in October 2013.
But estimated transmission charges have rocketed. Two years ago system operator National Grid quoted a potential £45-60/KW per year; its latest estimate, however, is around £96/kW, taking the annual charge for the wind farm from £5 million to £12 million. Muaitheabhal is the most advanced of the roughly 400MW of potential wind capacity on Lewis, where estimated transmission charges for future generation would be among the highest in the UK, only exceeded by those on Shetland.
While developers on the island are disputing the charges, utility company SSE has just shelved its plans for a Western Isles interconnector between the island of Lewis and the mainland, something that had been identified as a necessary investment by the ENSG review. The utility says that without a firm commitment from generators it could not proceed with the subsea cable.
Western Isles Council accuses SSE of discrimination against the islands. The council looks to renewables for reversing the economic decline and depopulation of the isles - one of the poorest communities in the UK.
"Unless there were changes to the regulatory approach, the rich renewables resources in the Scottish islands would effectively be sterilised," says council leader Angus Campbell. "Tapping that resource is clearly in the national interest. To require private developers to underwrite the entire cost of the necessary network upgrades is simply wrong."
Any reduction in charges for the north of Scotland and the islands will increase the overall burden on network users further south.
Financing challenges
Lack of finance is another factor that is slowing down the rate of projects moving to construction. The credit crunch saw a collapse in the project finance market, says Gordon Edge, RenewableUK's director of policy. He notes, though, that 2009 was a record year for deployment, thanks to a massive increase in the number of projects built financed by utilities. The split between project finance and balance-sheet finance moved from 50-50 for projects built in 2008 to around 80-90% balance-sheet financing in 2009. "Utilities still had access to the bond market to corporately finance themselves and therefore their projects," he explains.
For the few banks willing to offer project finance, the focus was on quality projects and known clients, says Edge: "Generally it was the bigger companies, who had a better track record and a bigger balance sheet, that got loans."
But 2010 saw a decline in the number of onshore projects financed on utility balance sheets, he states. "There is only so much capacity within the big six (UK utilities) to build projects out of their own resources," Edge says. "They are also starting to focus heavily on the offshore market, which is very capital intensive and is not open to project financing."
Nonetheless, prospects are brighter for a new wave of projects to be built over the next few years, he adds. "We are seeing a resurgence in project finance."
The European Investment Bank has a loan scheme in collaboration with commercial banks specifically aimed at helping small projects. "We are starting to see some interest coming back in the underwriting market," Edge continues. "Banks are more confident that if they sign deals, other banks will come in and buy some of that debt off them."
But the focus will remain on relationships and quality, he warns: "If you don't have high-quality wind resource data or the wind speed is a bit low or the grid connection is a bit difficult, then it's going to be a struggle."
Further obstacles are provided by the large number of conditions attached to construction consent, says Richard Glover, a partner at law firm Hammonds. "They take a huge amount of time and money to satisfy," he says. "So don't pop the champagne too early."
One of the biggest sticking points is aviation - usually due to wind turbines' effect on air-traffic radar screens. In the past, the UK's energy and climate ministry DECC or the Scottish government would refuse consent for a project if the Ministry of Defence or air traffic control body NATS objected. More recently, however, DECC has granted consent subject to conditions that satisfactory mitigation solutions can be found. Around 1GW of consented onshore capacity is held up while solutions to this problem are sought.
NATS and Raytheon Canada, which supplied all of NATS' fleet of air traffic control radar, are more than half-way through a research programme funded by industry and government to find a solution to eliminate the "sparkle" effect of turbines on radar screens. Their findings, involving both new software and radars, are due to be published this year. The industry hopes a technical solution will be deliverable 18 months later.
NATS has raised concerns that the government's practice of giving projects the go-ahead with aviation conditions raises expectations that the Raytheon project will be successfully deployed.
But, providing a solution can be found, the question then will be who will fund it. Rachel Solomon-Williams, deputy head of land-based renewables at DECC, points out that replacing radar is extremely expensive. "We are going to need to find a way of bringing together interested parties to fund it in the most fair way." In a more favourable economic climate the government might step in to help with the funding, she says. "But it's not something we can guarantee these days."
The cost of aviation mitigation is yet another burden to bear, warns Edge. Land rentals and business rates - or local property taxes - have increased, as well as operational costs, including maintenance, he says. "It's not getting any cheaper and if we have to pay more just to get a project built, we may not get projects built, simple as that."
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