Energy: Tide may turn for renewables policy

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The Isle of Man has reaped many benefits from its independent stance as a Crown Dependency just 34 miles off north-west England. But the financial burden of maintaining its physical independence has been considerable, and nowhere is this more visible than in the case of its energy industry.

The Manx Government has invested around £400m ($623m) over the past decade in upgrading its electricity generation and power supply infrastructure. A 40MW sub-sea interconnector cable with the UK mainland was commissioned in 2000 and in March 2004 Pulrose, an 84MW combined cycle gas turbine generating plant, began supplying the vast bulk of the island’s electricity.

The huge scale of the investment is underlined by the fact that if the UK had invested the same amount per head of its population it would have required £300bn over the past decade. This comparison helps explain why there was such controversy over the investment when it ran over budget. Several heads rolled at the Government-backed Manx Electricity Authority (MEA), and the Treasury is still providing £11m a year to cover the extra borrowing costs.

But the political uproar over the cost of the power plant has subsided, and the island now has one of the most modern electricity networks in the world.

Electricity prices are still higher than on the mainland but fuelling the power plant by natural gas, rather than heavy fuel oil, has saved around £20m a year. The MEA’s record on minimising power outages (supply interruptions) is as good as any.

The island’s electricity demand is growing by around 1 per cent a year and it has enough capacity for the foreseeable future – which puts the island in a better position than the UK mainland, says Ashton Lewis, the MEA chief executive. Indeed the MEA is a sizeable net exporter of electricity to the UK mainland and generates around 10 per cent of its £60m a year revenues from this source.

“We now have a diversified power generation portfolio, capable of meeting our needs well into the future, and our CO2 emissions per unit of grid electricity have reduced by approximately 40 per cent, and are now significantly less than UK Grid average”, says David Cretney, minister for trade and industry, who oversees energy policy.

The next big issue rapidly rising up the Manx government’s energy policy agenda is the question of renewables. There is already a small hydro-electric installation at Sulby reservoir, which provides about 1 per cent of the island’s power, and a waste incineration plant, which provides another 4 per cent.

But these initiatives pale into insignificance compared with the potential for tapping into the island’s considerable reserves of wind, wave and tidal power.

“The island is in a much better position than the rest of the UK to become self sufficient in renewable energy,” says Mike Proffitt, a former MEA chief executive, who now runs REH, a Manx-based renewable energy company that invests in wind farms outside the island and is testing a proprietary wave power technology in Australia.

Researchers believe that the island has potential for the development of significant offshore wind farms with installed capacity far in excess of current or projected needs. Also, a number of sites have been identified where tidal stream development could be an option, namely off the Point of Ayre and Langness.

However, the installation and running costs of offshore wind farms and wave and tidal power systems, in such an aggressive environment, are significantly higher than traditional generating methods.

The Manx government has set up an energy policy working group to look at renewable energy generation, among other things. It will include renewable energy targets and consider a range of technologies.

“Renewable energy is very much on the Government’s agenda and is receiving more time and consideration than ever,” says Mr Cretney, who notes that his government is committed to “substantially increase” the island’s self-sufficiency and sustainability in power generation.

The government’s evolving renewable energy strategy has been helped by the growing number of listed renewable energy companies based on the island. At the end of July 2008, the island’s so-called “clean tech” companies had a combined market value of £1.7bn and ranged from renewable energy developers to carbon trading companies and biofuel producers.

Nevertheless, realising the island’s considerable renewable energy potential will be no easy matter. The current lack of wind farms on the island highlights the potential environmental opposition facing developers.

The Manx government has received a stronger-than-expected response to its recent energy policy consultation document, which has delayed any announcement on future energy policy. However, an initial indication of the outcome of the review is expected before the end of the year and this will show whether the island really has the political will to develop its renewable energy potential.

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