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Investigating the potential for community owned high head micro

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Investigating the potential for community owned high head micro Powered By Docstoc
					                                                                                           2010




Investigating the potential for
community owned high head micro
hydro in Carmarthenshire




    Cymunedau Di Garbon                                     Zero Carbon
       Communities



                                                                                           The Green
                                                                                           Valleys
                                                                                           1/1/2010




    Cyllidwyd y prosiect hwn drwy Gynllun Datblygu Gwledig Cymru 2007-2013 a ariennir
    gan Lywodraeth Cynulliad Cymru a’r Gronfa Amaethyddol Ewrop ar gyfer Datblygu
    Gwledig.

    This project has received funding through the Rural Development Plan for Wales 2007-
    2013 which is funded by the Welsh Assembly Government and the European Agricultural
    Fund for Rural Development.
Table of Contents
Introduction ............................................................................................................................................................................... 4
History of Hydro Electricity ........................................................................................................................................................ 4
Benefits of hydro electricity ....................................................................................................................................................... 5
     Environmental benefit .......................................................................................................................................................... 5
     Financial benefits .................................................................................................................................................................. 5
     Indirect benefits ................................................................................................................................................................... 6
          Preservation of the uplands ............................................................................................................................................ 6
          Supporting rural communities......................................................................................................................................... 7
Hydro Electric Technology ......................................................................................................................................................... 8
     Basics of Hydro Electric Generation ..................................................................................................................................... 8
     Generation Calculation ......................................................................................................................................................... 8
     Types of hydro technology ................................................................................................................................................. 10
Developing Community Owned hydro electric installations .................................................................................................... 11
     Initial Planning Stage .......................................................................................................................................................... 12
     Viability ............................................................................................................................................................................... 12
     Feasibility Study Stage ........................................................................................................................................................ 14
     Financing Stage ................................................................................................................................................................... 16
Sources of Capital funding for Community Owned Generation Projects ................................................................................. 17
     Loan finance ....................................................................................................................................................................... 17
     Private investment capital .................................................................................................................................................. 17
     Community ownership ....................................................................................................................................................... 18
Constituting a Community Group ............................................................................................................................................ 20
     Constitution options ........................................................................................................................................................... 20
          Unincorporated associations ......................................................................................................................................... 20
          Incorporated associations ............................................................................................................................................. 20
     Trusts .................................................................................................................................................................................. 21
     An industrial and provident society (IPS) ............................................................................................................................ 21
     Community Interest Companies (CIC) ................................................................................................................................ 21
     Charitable Incorporated Organisation (CIO) ....................................................................................................................... 21
     Permissions stage ............................................................................................................................................................... 22
          The Environment Agency .............................................................................................................................................. 22
          Local planning authority ................................................................................................................................................ 22
          District Network Operator (DNO) grid connect permission .......................................................................................... 23
     Aftercare and looking forward ........................................................................................................................................... 25
Study into the potential of community owned hydro electric generation in Carmarthenshire .............................................. 26
     Technique ........................................................................................................................................................................... 26
     Geographical distribution summary ................................................................................................................................... 29


2
    Generation potential summary .......................................................................................................................................... 29
    Revenue summary .............................................................................................................................................................. 30
    Carbon saving summary ..................................................................................................................................................... 30
    Implications and Conclusions. ............................................................................................................................................ 31
Appendix ..................................................................................................................................Error! Bookmark not defined.32
    Summary table of data used for 8 viability reports ............................................................Error! Bookmark not defined.45




3
Introduction
This report has been commissioned by the Carmarthenshire Energy Agency (CEA) and
undertaken by The Green Valleys (Wales) Community Interest Company. It is intended to
highlight the potential that small scale hydro electricity generation has for rural
redevelopment and for its ability to contribute significantly towards Wales’ electricity
demand and, more broadly, the UK commitment under the Climate Change Act 2008. The
Environment Agency has recently published a report on the potential for hydro electrical
generation on the rivers of England and Wales1. This report highlighted that many low head
sites are environmentally sensitive due to the presence of migratory fish. The report did not
however focus on the small waterways and tributaries of the uplands of Wales and this
report is intended to highlight the potential for significant sustainable energy generation in
this region.

The Green Valleys (TGV) is a community interest company founded by residents of the
Brecon Beacons National Park who design and install high head micro-hydro electric
systems. As a not-for-profit company all profit are reinvested into developing low carbon
initiatives and environmental improvements for the benefit of the local community. TGV
have an established track record in developing micro-hydro systems with the highest level
of environmental protection and, where appropriate, community involvement.


History of Hydro Electricity
Water is a natural resource which has been used to generate power, in one form or another,
for centuries. The development of centrally-generated electric power eventually reduced
the requirement for small hydro sites and most were decommissioned with the introduction
of the National Grid. There used to be over 30,000 working mills in the UK (1850)2. The
number of working mills is now less than 400 and less than 100 mill sites are generating
clean electrical power. Remnants of decommissioned hydro electric generation systems
scatter the countryside as testament of the potential for power generation in the region.
The National trust has identified 52 sites3 on its properties where hydro electric power was
historically generated. In Newcastle Emlyn, straddling the border between
Carmarthenshire and Ceredigion, a hydro electric plant dating back to 1908 would supply
the town’s electrical needs via a local electricity distribution grid4.


1
    http://www.environment-agency.gov.uk/business/topics/water/32022.aspx
2
    http://www.ukmills.com/index.htm
3
    http://www.nationaltrust.org.uk/main/w-energy-report-2010.pdf
4
    http://www.bbc.co.uk/dna/h2g2/A25436405

4
Benefits of hydro electricity

Environmental benefit
Hydro electric generation is clean energy; it does not rely on the combustion of fossilised
hydrocarbon material which releases carbon dioxide into the atmosphere. The UK is
committed in the Climate Change Act (2008) to reduce carbon dioxide emissions and it is
therefore essential that clean sources of energy are exploited in order to reduce
dependence on fossil fuel energy production.

Hydro electric generation, if considerately applied, is a sustainable form of energy
production. It only taps into the potential energy of existing systems in the same way that
solar and wind generating technologies do.

Financial benefits
As fossil fuel sources are exhausted not only is the cost of their extraction set to increase
but a reduced supply couples with increasing energy demand will lead to dramatic increases
in the market price for energy. This was illustrated by the sudden and sharp transport fuel
increase in the UK in 2008 as British Gas and other suppliers raised their tariffs by up to
35%5.

The UK government has recognised the benefits of renewable energy generation and
supports renewable energy generation through several means, the most significant being
the introduction of Feed in Tariffs (FIT). This support is paid to renewable energy producers
in various amounts according to type of technology and the power produced. Many
renewable energy producers use their own electricity on site and export their excess to the
national grid. The electrical units (kWh) are sold for a minimum price of £0.03 per kWh
offering further financial gain for producers. The differing rates of support are shown in
Figure 4 – FIT rates for renewable technologies. Although hydro electric generation does
not receive as high a payment as some other technologies, the reliable availability of water
and the 24 hour a day generation of a hydro electric generator means that the energy
output and therefore financial return of the hydro electric system can be higher than other
technologies. Figure 5 - income comparison of 11kw examples demonstrates the varying
return from various technologies of the same scale. These figures reflect the fact that hydro
power can be generated 24 hours a day (unlike PV) and that although there are seasonal
fluctuations in flow there is a more consistent generating output than from wind.




5
    http://news.bbc.co.uk/1/hi/7533389.stm


5
    Technology                                Scale               FIT Rate/KWH

    Hydro                                     < 15KW             19.9p

    Hydro                                     15-100KW           17.8p

    Hydro                                     100KW-2 MW         11.0p

    Wind                                      1.5-15kW           26.7p

    Wind                                      15-100kW           24.1p

    Solar PV                                  4-10 kW            36.1p

    Solar PV                                  10-100 kW          31.4p

Figure 1 FIT rate comparison for different technologies

    Technology              System            FIT Rate per KWH    Annual Income
                            Size

    Wind (Avg 7m/s)         11Kw              26.7p              £6,675

    Hydro                   11Kw              19.9p              £11,505

    Solar PV                11Kw              31.4p              £2,763

Figure 2 FIT rate comparison for 11kw systems

Indirect benefits
There are several other indirect benefits of hydro electric generation and, though difficult to
quantify, are both real and significant.

Preservation of the uplands
The ability of the uplands to store water helps to regulate the flow of water into the fluvial
system and prevents both flood and drought events. The peat soils are formed from layer
upon layer of semi decomposed plant matter, principally sphagnum mosses. These mosses
serve two functions. The living mosses act as a water purification system, reducing silt loads
in upland streams making them more suitable habitats for many species. The semi-
decomposed matter, kept from full decomposition by the waterlogged acidic conditions,
acts as a globally important store of carbon6. The bogs have been systematically drained
over centuries in order to increase their agricultural value but this draining has allowed the
bogs in some areas to dry out. When dry the mosses are able to decompose completely
releasing the stored carbon into the atmosphere, compounding the effects of human




6
    http://www.wildlifetrust.org.uk/facts/peat.htm


6
induced climate change7. By encouraging landowners to consider hydro electric generation,
land that once had little agricultural value becomes a new income stream and providing an
economic disincentive for draining the land.

Supporting rural communities
Currently, 43% of the entire EU budget is spent on agricultural support8. The current
financial crisis and recession has prompted the need for cutbacks in government spending.
These cutbacks will affect all communities within the UK, both urban and rural. In rural
communities the average 19% cut in departmental budgets9 will undoubtedly result in a cut
back in services.

Rural areas are already poorly served by public transport services and suffer from higher
fuel costs associated with increased mileage. Community owned micro generation presents
the possibility for rural communities to become, in part, financially independent despite the
cuts in government spending.

    In Powys, Talybont on Usk Energy, who               The Llangattock Green Valleys, also in
    installed their community owned hydro               POWYS are using hydro electric energy
    electric turbine in 2005 have highlighted           to generate revenue for their
    through a community carbon audit, that              community group to further the low
    transport accounts for approximately                carbon technology aims of the group,
    30% of the annual carbon released per               partnering with British Gas’ Green
    person within the community. This has               Streets competition to install solar
    prompted the group to trial alternative             panels on housing, create allotments for
    modes of transport within the                       the local community and starting self
    community including electric assist                 sustaining biodiesel clubs supporting
    bicycles, electric cars and biodiesel               local biodiesel producers. The
    vehicles in an effort to reduce carbon              Llangattock Green Valleys are aiming to
    emissions from the community. Visit                 be a carbon neutral community.
    www.talybontenergy.co.uk for more
                                                        Visit www.llangattockgreenvalleys.org
    information.
                                                        for information about the project.




7
    http://news.bbc.co.uk/1/hi/sci/tech/6502239.stm
8
    http://ec.europa.eu/budget/budget_glance/what_for_en.htm
9
    http://www.hm-treasury.gov.uk/spend_index.htm


7
Hydro Electric Technology

Basics of Hydro Electric Generation
Hydro electric plants work by converting the potential energy from water at height into
electrical energy. This is achieved through water powering a turbine - using the rotational
movement to transfer energy through a shaft to an electric generator.

The two basic classifications of hydro electric generators are ‘High head’ and ‘Low head’.
Head refers to the height from which the eater drops before reaching the turbine.
Therefore ‘low head’ refers to mills and generators in large rivers with great volumes of
water that meander through the lowland valleys. ‘High head’ is used to describe those
systems that use only a small amount of water but are able to use the water once it has
dropped from a great height.

To capture this potential energy in a controlled form, some or all of the water in a natural
waterway can be diverted from a watercourse through an intake and into a pipe which will
transport the water downhill. The water can then be directed in a focussed jet under
pressure onto a turbine wheel. The turbine and controller units convert this energy into
electricity that can be exported to the national grid. Micro hydro is typically defined as the
generation of electricity from a few hundred watts up to 100kW.

Generation Calculation
Hydro power is a mature and well-understood technology that offers many advantages over
other renewable energy:

       High efficiency and high power density
       Long system lifetime (up to 50 years)
       Predictable energy outputs
       Excellent load factor characteristics

The particular technologies required for generation differ from site to site according to
various site characteristics and these are outlined below. The fundamental elements which
make up the basic power generation equation are explained in below. However, there are
several other factors which will reduce the actual power that can be generated at any site.
There are multiple factors that reduce your potential energy during conversion. These
include:

        Head loss in pipes
        Efficiency of turbines
        Loss in cables
        Loss in inverters


In order to simplify the calculation at the planning stage of a hydro electric installation,
these losses are assumed to amount to 50% of the original calculation.

8
    Elementary Generation Calculation

    Q (flow): this is the amount of water that passes a given point in a stated period
    of time. It is usually measured in m³/s or l/s.

    H (head): This is the vertical distanced that water drops from the source to the
    turbine. It is measured in meters, m.

    Gravity constant: Also known as acceleration due to gravity, it is represented by
    the letter g (g=9.8m/s2).

    Potential energy: The potential output of any site is usually expressed in
    Kilowatts (kW)

    Example: A watercourse with a mean flow of 0.02m3/s (20l/s) with a head of
    100m, and assuming a 50% loss in power, could generate around:

            20 x 9.8 x 100 = 19.6 kW



Figure 3 Elementry Generation Calculation




    The basic power of a river therefore can be expressed by the equation:

    KW = Q x H x g
Finally, it is important to remember that the Environment Agency will not allow any
installation to abstract ALL of the water in a river or stream. The EA have regulations and
standards to protect both the local flora and fauna in the depleted reach and also the
greater riparian system. Consequently the Environment Agency will place a restriction on
the water that can be abstracted, albeit temporarily, from the waterway.

The proportion of water can be abstracted is denoted by the ‘Q’ value. Typically the Q value
is set at between 90% and 95%. For example, Q95 means that the hydro system can take
water from the watercourse when the flow is above the flow of water that is running in the
watercourse for 95% of the time.

The Environment Agency then set a % of the flow above the Q95 level that can be collected.
This is typically 75%. When the water level falls below this level the water will stop being
diverted into the hydro system.




9
Types of hydro technology
There are several types of turbine that are used or have been used for hydro electric
generation each is adapted for particular conditions of flow or generation requirements.
These are broadly split into two groups: Impulse turbines and Reaction turbines. Impulse
turbines rely on the speed of the water, generated by the hydraulic head - to move the
wheel and are commonly used for high head hydro electric systems. Reaction turbines on
the other hand rely on the weight of the water to move the wheel and are generally used
for low head systems.

This diagram can be used to choose the appropriate turbine type once the basic flow and
head data is available.




Figure 4 Turbine types and applications (courtesy of BHA)

The most common turbine type used in high head hydropower installations is a Turgo or
Pelton wheel. These maximise the kinetic energy transfer from the water to the wheel
leaving the water drained of the kinetic energy, exiting the system very slowly. For full
information and descriptions of these different turbine types please visit the British Hydro
association website. The British hydro association has also published a useful guide to micro
hydro10.




10
     http://www.british-hydro.org/mini-hydro/index.html

10
Developing Community Owned hydro electric installations
There are several stages in the process of implementing a community owned hydro electric
installation. The basic steps are laid out below:




Figure 5 Stages of Hydro Electric Installations




11
Initial Planning Stage
By far the greatest challenge faced by any community group looking to install a community
owned renewable installation is choosing a suitable site and obtaining the necessary
landowner permissions and agreements.

The information contained within Basics of Hydro Electric Generation above should be
sufficient, when combined with local knowledge and a detailed ordinance survey map to
scope and shortlist suitable sites for generation. Often these will be on private land and the
lucrative returns on renewable generation often, and quite understandably,
encouragesdlandowners to invest themselves. Whilst TGV is happy to act as installer to
private schemes our main focus is on supporting and enabling community owned
generation.

A benevolent or absent landowner is often the greatest ally to a community owned
renewable generation project. Both Forestry Commission Wale and Welsh Water (Dwr
Cymru) own land that is both suitable for micro hydro generation and who are approachable
for community owned projects. Both own large tracts of land across the region, much of it
situated in the uplands. They are both willing to entertain approaches from community
groups to develop smaller sites.

If landowners are unwilling to provide the capital to develop the site themselves then they
may be prepared to lease the land to develop for the development of a micro-hydro system
in return for an annual rent or profit share.



Viability
Once a potential site has been found it is almost always necessary to professionally explore
the potential of the site. A full feasibility study can be expensive and it is good practice to
first complete a simple viability assessment (sometimes called a pre-feasibility study) to
determine whether the site has potential before time and money is spent on a formal
feasibility study.

The viability report should identify the generation capacity of the site and give an outline
costing that will allow the approximate payback period of an investment. It also needs to
identify at an early stage any features which may affect the ability of the site to be
economically developed including potential ecological or geographical issues that may affect
the permissions and licences or the construction costs. At this stage all landowners involved
should be approached and consulted as without a landowner’s permission, no installation
can take place. It is important to remember that where a stream or river marks the
boundary between two landowners, both of those landowners have equal rights to the
water in the stream and both must give full permissions for access and abstraction.




12
     Component Costs of Hydro Electric Installations

     The installation of a hydro electric generator is a major financial undertaking and
     it is important to understand ht component costs of an installation. Here The
     Green Valleys have provided a capital breakdown of a typical 15kw installation.

     The installation includes an intake, buried penstock across improved pasture
     connected to a turbine encased in a turbine house. The installation also includes
     grid connect work and planning consent and abstraction licence consultancy.
     These figures are based on the particulars of a site and are by means of an
     indication only.

                       Intake                              £5,000

                       Penstock                            18,000

                       Turbine house                       £8,000

                       Manifolds and fittings              £4,000

                       Turbine                             £1,500

                       Generator and controller            £9,000

                       Electrical Installation             £16,000

                       General installation                £2,700

                       Permissions consultancy and apps    £4,000

                       Total                               £68,200

     Based on monthly flow duration statistics, the above 15kW system will generate a
     total of 60,768 kWh in each year. With FIT of 19.9p/kWh and a guaranteed
     export tariff of 3p/kWh then the system can generate a gross income of over
     £12,000 per annum meaning that the system will pay back in 5-6 years.

     However it should be noted that FIT are guaranteed for 20 years (for micro-hydro
     power) and indexed linked providing an excellent long-term return.




Figure 6 Components of Hydro Electric Installation Costs




13
Feasibility Study Stage
A professional assessment of the site will undoubtedly be required by both the local
planning authority and the Environment agency. Typically any company offering an
installation service will also offer a system design and feasibility study service 11. Any
feasibility study commissioned for a prospective installation should at the very least, include
details of:

            Geographical analysis – discussing the catchment area of the proposed
             installation as well as the particulars of the local geography and topography on
             site. This analysis should enable the description of the Abstraction regime
             required for the proposed system design.
            Civil works – A description of any required preparation of site, the intake
             structure, the forebay tank, turbine house and any discharge infrastructure
             needed.
            Turbine and generating equipment – A description of the generating equipment
             explaining its suitability t the proposed installation
            Grid connection - details of the proposed grid connection location and technique
             demonstrating that the connection will be sufficient to deal with the generation
             capabilities of the proposed system.
            Energy resource and projected income - Although it is unrealistic to expect the
             feasibility study to accurately predict rainfall levels in the coming years, an
             educated estimate of annual income based on catchment area analysis and
             system design.
            Full detailed costing of the proposed installation - This should include parts and
             labour as well as the costs of any permission required for installation.
            Other features – the feasibility study should highlight any anomalous features
             such as listed buildings, Nature reserves or SSSi’s including preserved trees that
             may possibly be affected by any installation. The Feasibility study should also
             highlight any potential planning or environmental issues that may stand in the
             way of a proposed installation.

Choosing a service provider to conduct this investigation for you can be difficult and often
many prospectors rely on recommendation from other renewable generator when choosing
an installer.

It is also possible for community groups to research and produce feasibility reports for
themselves relying on locally sourced expertise and skills however due to the




11
     See Appendix for a sample Feasibility study from The Green Valleys.


14
announcement of the MCS accreditation any installations will need to be carried out by
certified installers in order to be eligible for FIT payments.
Micro-Generation Certification Scheme



In order to receive the new Feed in Tariffs for renewable energy generation it is
necessary for both the installer and the technology to be certified under the
Micro-generation Certification Scheme (MCS).

According to the MCS website : The Micro-generation Certification Scheme (MCS)
is an independent scheme that certifies micro-generation products and installers
in accordance with consistent standards. It is designed to evaluate micro-
generation products and installers against robust criteria providing greater
protection for consumers.

At the time of writing this report the MCS there is a great deal of confusion in the
hydro industry about the details of the MCS for hydro. As it stands both the
installer of the technology and the technology itself will need to be accredited to
receive the Feed in Tariff payments. Some parts of the micro hydro industry are
contesting the accreditation for hydro pointing out, quite reasonably that hydro
installations can only be deemed truly ‘safe’ if they are designed to be site specific
and tailor made for installations. To certify an ‘off the shelf’ unit for hydro
generation would mean consumers would be installing a system that was not
custom made for their location and therefore it’s safety and suitability for the site
could not be assured.

Away from this discussion the micro hydro industry is still awaiting confirmation
from MCS about what the accreditation will involve and entail. Unfortunately at
the time of writing, the MCS has not yet announced any bodies to act as installer
certification or technology certification for micro hydro electric installations.

Evidently the situation cannot continue as it is and eventually MCS will
accommodate the micro hydro industry fully. This is a very dynamic situation. To
keep fully up to date please visit the MCS website
http://www.microgenerationcertification.org/ . You can also keep up to date by visiting the
website of the Micro-hydro Association www.microhydroassociation.co.uk .



Figure 7 Micro Generation Certification Scheme




15
Financing Stage
The financing renewable of installations has recently changed with the announcement of
the Feed in Tariffs. FIT have brought about a substantial change in the way that small scale
renewable energy generation is subsidised. Until the introduction of FIT most small scale
renewable energy schemes funded with grants to cover all or part of the capital cost. Now
with the introduction of FIT the emphasis of the subsidy has moved from the capital cost to
the price support through payments for price per unit generated. The FIT system has been
designed to reward private investment and consequently many of the grants previously
essential for funding small scale renewable projects are no longer available. This has been
compounded by a narrow interpretation of the EU’s rules concerning State Aid (see the box
below). This means that in some cases it is not possible to both receive capital grants from
sources that originate with the UK government and to receive FIT.

For community groups considering significant projects the State Aid issues outlined above
mean that groups may have to find funding for installations from private investors or seek
loans from banks for the installation. For a perspective on the challenge of community
ownership of renewable energy supply then see the following article by Chris Blake
published by Cynnal Cymru12.Consequently for many schemes it is necessary to raise the
capital cost of the scheme from a number of sources that do not include UK government
originated grants. In addition to the loan finance additional capital will need to be raised
either from grants (especially if the grant is from a private source and does not count as
State Aid) or from private investors – possibly through a share issue.


 State Aid and FIT

 The following extract is taken directly from the website of the Department for energy
 and Climate Change (DECC):

 Recipients of publicly funded grants for a plant will be eligible for the FIT scheme for
 that plant without having to repay the moneys received if they are in compliance with
 the EU’s rules on de minimis aid - i.e. if they have not received support from public
 funds (including FIT payments) that would exceed thresholds specified in de minimis
 regulations (€200,000 over a period of three years in most cases)

 This will generally means that most large community owned projects will only be able
 to receive one or the other. There are however exceptions to this rule and these are
 laid out in some detail on the DECC website.
 http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/energy_mix/renewable/feedin_tariff/FIT
 _grant/FIT _grant.aspx


12
 Cynnal Cymru Viewpoint – December 2010
www.sustainwales.com/home/downloads/globallysusd/10_12/globallysusd_eng.pdf


16
Sources of Capital funding for Community Owned Generation Projects

Loan finance
It can be possible to part-finance a hydro scheme through commercial loan finance. For
hydro power systems these loans can be between 50-65% of the capital cost. For larger
loans above £150-200k it may be possible to find a lender that is willing to lend to finance
the scheme using the income generated by the scheme as the security for the loan. For
smaller loans below £100k the costs of setting up these, so called “non-recourse loans” can
be prohibitive and without an asset, such as land, to act as security. TGV has set up a £0.5m
umbrella facility with Finance Wales which allows individual schemes to benefit from loan
finance (between £17,500 and £125k).

Private (non-State Aid) grants

Although in short supply, funding is still available for some community projects through
grants from Trusts and private companies including some of the major energy companies.
Demand for these sources is high and the application process therefore lengthy and some
have match funding requirements but nonetheless they have the potential to represent a
significant proportion of a community project’s capital requirements.

There are many organisations that will help guide community groups through the available
funding for projects such as The Energy Saving Trust’s Green Communities 13

Institutional Investment Capital
Some investors will be attracted to the potentially high returns that FIT qualifying renewable
energy systems can generate and it may be possible to get some investors to invest directly
in the scheme or indirectly through a special purpose investment vehicle into a range of
schemes.


Private investment capital
A number of private individuals may be willing to invest in a scheme. This can be done as a
single substantial investment directly into the scheme (say for £5-25k) or it can be part of a
more general fundraising where smaller sums are raised from a number of individuals.
There a number of ways of doing this but you do need to take professional financial advice
as share or bond issues to the general public are regulated by the Financial Services
Authority and there extensive regulatory considerations.




13
     http://www.energysavingtrust.org.uk/cafe


17
Community ownership
In many cases the goal is community ownership in some form. But you need to be clear
about what constitutes community ownership and what is viable given the capital that
needs to be raised in each case. By community ownership many people understand that
some form of incorporated body under community control is the full or part owner of the
scheme. This is the goal but unless the community can secure capital grant in some form
this may be an unachievable dream for most. Community involvement can mean private
ownership with a significant proportion of the investors coming from the local community.
This keeps the financial benefit within the community but is obviously very different from
collective community ownership

Energy4all14 offer a model based on cooperatives where communities can invest directly
invest in their own schemes or in stakes of schemes of larger developers. A summary of
some of the funding models for community renewables can be found in the paper “Funding
the Future” by Richard Hoggett15

The Green Valleys16 based in the Brecon Beacons in Wales, can also help community groups
to realise their ambitions offering a whole service from viability screening to installation and
can help source capital funding for community groups. See the text box below for
information about The Green Valleys.




14
     http://www.energy4all.co.uk
15
     http://tinyurl.com/fundingthefutre

16
     www.thegreenvalleys.org


18
In order to facilitate hydro electric installations for community groups and individuals
The Green Valleys (TGV), based in the Brecon Beacons, offer financial support
packages based on their own capital reserves and secured loan finance from banks to
support hydro installations.

TGV operate as a community interest company meaning that all profit from their
operations is asset locked; it must be used to further the purposes of the Community
Interest Company. In the case of The Green Valleys that purpose is stated as to
“Create carbon neutral, financially secure and sustainable communities”.

For community groups and landowners TGV offer a complete service from initial
feasibility report to installation including 100% finance packages. Specifically TGV can
offer:

       Free viability reports to assess the basic potential of a site
       Feasibility studies and consultancy
       Management of local authority and Environment Agency permission processes
       Loan and capital financing including advice on grants and Feed-in Tariffs
       System design, construction, and maintenance

Because TGV is a not for profit organisation, It is committed to delivering support at
the lowest cost so that TGV can maximise the long-term financial benefit to
communities.

For more information about The Green Valleys please visit the website
www.thegreenvalleys.org or call 07969 137719 to speak to a member of the team
about your interest.

  Figure 8 the Green Valleys




  19
Constituting a Community Group
Often in a community, when a project is being considered, a group of like minded
individuals has already come together to discuss the possibilities, these individuals may be
approaching the subject from different angles, some may be concerned about the
environmental impact of climate change, or fossil fuel dependence and the impending rise
in fuel costs. Other may have no interest in the environment but are seeking to empower
their own communities and to secure revenue streams independently of government. With
large community groups it is often advisable to nominate a steering group to undertake the
work and report back to the main group in order to work as efficiently as possible.

 One of the most challenging aspects of community owned generation is deciding on and
finalising the objectives of the group. Different community members will have different
opinions of the direction a group should take. The decisions on community group structure
will have implications on funding available and what can be done with revenues and is not a
decision to be taken without seeking guidance. The legal form chosen for the incorporation
of the community group may be driven by how the money is going to be raised. Some
structures will support individual or collective investment, others will not.

Whilst finalisation of constitution does not necessarily have to be completed before moving
forward, it is essential that the group explores the options available to them and the issues
about project finance, remuneration of officers, and distribution of profits are considered at
an early stage.

Constitution options
Community groups can be organised into one of six different structures:

Unincorporated associations
This can be any group of people who meet on a regular basis regarding a common interest
or purpose and will undertake work for the benefit of the public. They are usually governed
by a constitution and managed by a management committee. Unincorporated groups /
associations are not recognised as a legal entity by law. The members of the committee are
legally liable as individuals

It is also advisable to have some written constitution to identify how the group will run, who
is responsible for different aspects of the group, how the group will settle disputes, and how
the group will be disbanded including how any group funds will be distributed.

Incorporated associations
If a group/association is incorporated it means that the group is recognised by law as a legal
body and becomes a company. There are two different types of company:




20
          A company limited by guarantee
          The company is managed by its directors and is regulated by Companies House.
          The company can be either charitable or non-charitable however if charitable it will
          also be regulated by the Charity Commission.

          A company limited by shares
          The Company is owned by its shareholders. It seeks to make profit, which are
          distributed amongst the shareholders.
          (Charitable organisations sometimes set up a wholly owned other group to pursue
          non-charitable objectives or as trading arms).

Trusts
Trusts are set up to hold money or property for clearly defined purposes – set out in an
official trust deed.

An industrial and provident society (IPS)
IPSs are set up to carry out either industrial, business or trade activities for the benefit of
the community. They are incorporated, with limited liability for their members. They
cannot register as charities but are required to register with the Financial Services Authority
(FSA). It is possible for IPS to raise capital through a share issue.

Community Interest Companies (CIC)
This is a new form of company that has existed since 2005. A CIC must register at
Companies House and must take a community interest test and have an asset lock, to
ensure that the CIC is established for community purposes. The assets and profit of a CIC
are dedicated to these purposes. A CIC cannot be a registered charity – they do not have
charitable status, even if their objects are entirely charitable in nature.

Charitable Incorporated Organisation (CIO)
In 2006 The Charities Act introduced a new legal form of incorporation designed specifically
for charities known as the Charitable Incorporated Organisation (CIO).
The CIO has been designed to allow charities to have a limited liability structure without
needing to have company status and be regulated by both the Charity Commission and
Companies House. The CIO will combine the advantages of a corporate structure such as
reduced personal liability without dual regulation and the associated bureaucracy and costs.
As yet the CIO structure is not available to be used by charities but is expected to pass final
legislation in spring 2011. For more details please visit www.charity-commission.gov.uk.

For detailed information about different constitutions and how to arrange them formally,
please visit the Companies House website17.




17
     http://www.companieshouse.gov.uk/.


21
Permissions stage
Assuming that the feasibility study has highlighted no barriers standing in the way of the
proposed installation it will be necessary to approach the local planning authority and the
Environment agency for formal permissions for the installation.

In our experience it can be very expensive and time consuming for small community groups,
with limited resources to obtain local authority planning consent and an Environment
Agency Abstraction Licence. These are technical processes which pose a steep learning
curve for community volunteers – for example a community group in Monmouthshire has
just spent 2 ½ years and £27,000 (from various grants) getting necessary permissions for a
36kW community hydro scheme18.

The Environment Agency
An abstraction licence is needed for permission to remove the water from the river or
stream. Although with hydro electric the water is going to be returned to the same stream
a little further down, it will still leave a section of river or stream with less water than it had
before, known as the depleted reach. The reduced amount of water in the depleted reach
can affect organisms including migratory fish, endangered indigenous crayfish, mammals
such as otters as well a range of lower plant species (mosses and bryophytes) that depend
on the increased relative humidity of the habitat to survive and thrive.

The abstraction licence gives permission to abstract water, to create a weir or dam and to
discharge the water back into the waterway. The basic cost of the application is around
£200 but there may be other associated costs including the advertising of the application
and surveys as required by the Agency. It is important to call the Environment Agency and
discuss the proposal even before the feasibility study takes place in order to highlight any
potential pitfalls or barriers in the way of development as soon as possible.
Full details of the abstraction licence process can be found by visiting the Environment
agency website19 or by calling them directly on 08708 506506. The abstraction licence
application is a complicated process with many required fields of data, With The Green
Valleys is developing a close working relationship to streamline the process – reducing the
costs and elapsed time for a licence by building understanding between applicant and
licence issuer.

Local planning authority
The local planning authority will have several key purposes in mind when considering any
application, namely:



18
     www.tapenergy.org
19
     http://www.environment-agency.gov.uk/


22
        The appearance of the scheme, they will consider whether it is sympathetic to
         the local vernacular and landscape
        Pollution, in particular, with hydro electrics, any noise pollution resulting from an
         installation.
        Disturbance to the local area during the construction of the installation, to local
         residents and disruption to the local traffic
        Preservation of any structures of historical importance in the area be they listed
         buildings or other archaeological features.

Your local planning authority will be able to give you detailed advice as well as stage by
stage official and unofficial consultation in order to ensure that the proposed installation
and the associated planning application meet these requirements.

For most planning applications in Carmarthenshire you will need to consult with
Carmarthenshire county council planning department. However if the installation lies either
entirely or partially within the Brecon Beacons National park then it is the National park
authority that must be consulted and applied to.

Carmarthenshire county Council planning authority has produced a useful flow diagram to
explain the application process. This can be found by visiting the Carmarthenshire County
Council website20. The Welsh Assembly Government has also published a series of leaflets
regarding renewable energy which provide a useful outline prior to any in depth
investigations21.

The Green Valleys provides a complete planning and consent service. For local authority
planning permission TGV has developed a standard Section 106 agreement that ensures
that a proportion of the profit from the scheme is invested in biodiversity enhancements
and preservation of upland water courses.

District Network Operator (DNO) grid connect permission
Electricity is moved around the county through a series of cables known as the national grid.
Excluding the main electricity transit lines that move electricity from region to region there
are 3 types of electricity supply: single phase, split phase and three phase . Each of these
lines has a different capacity which can impact on the size of any proposed hydro electric
installation.




       20
         http://www.carmarthenshire.gov.uk/English/environment/planning/applications/Documents/Plann
       ing%20Application%20process.pdf

       21
            These can be downloaded from www.cymru.gov.uk



23
A district Network operator (DNO) is the company responsible for maintenance of the
National Grid within a region. For the whole of South Wales the DNO is Western Power
Distribution (WPD).

Western Power will need to be made aware of any export of electricity into the national
grid. In theory enterprises only need to enter discussions with the DNOs for systems that
will be above 16 amp output. However in practice it is wise to notify WPD of all intended
connections. As WPD will also confirm what formal application process groups need to
follow - exports between 16 and 42 amps per phase use a simpler Application for
Connection, above 42 amp per phase uses Form PG1a).

As can be seen below, applications to Western Power Distribution require a significant
amount of electrical knowledge and many of those considering renewable installations will
rely on the installer to make these applications for them. For initial enquiries to WPD you
can contact them via their website22.

Assuming that all of the necessary permissions above have been granted and that finance
for the project has been secured, the installation of the hydro project is, by comparison, a
relatively straightforward process. For community installations this is often where the
whole community can get on board lending a hand where appropriate to reduce costs such
as installing penstock or construction or turbine housing. In order to meet the MCS
accreditation requirements discussed above, all work will need to be overseen by an MCS
accredited installer.




22
     http://www.westernpower.co.uk/getdoc/d20c3c3f-92b0-416a-93ce-74f2ec9f8e16/New-Connections.aspx




24
Applications to Western Power Distribution

In an Application for Connect application WPD are interested in receiving the
following:

         Location (grid coordination), name and contact information of export
          property.
         Name and contact details of design consultant.
         Generation type verification test certificate.
         Schematic of system circuit.
         Earthing arrangements

In a PG1a application WPD are interested in receiving the following:

         Location (grid coordination), name and contact information of export
          property
         Name and contact details of design consultant
         Preferred connection voltage
         Number, size and similarity of generation sets
         Type of generation and ‘energy source (e.g. water, sun, etc…)
         Maximum potential export of the proposed installation
         Maximum required import and whether this needs to be secure (generally
          this is only for places where the power supply is critical and no power cuts
          can be tolerated). If there is no change from the existing import then it is
          possible to say ‘as existing’
         Where the unit’s electric control gear has built in power factor correction
          and the power factor of the equipment



Figure 9 District Network Operators

Aftercare and looking forward
Intake screens will need to be regularly cleared of debris, especially during the autumn
months’ leaf drop. As well as this systems will need regular servicing and inspections to
ensure that they are running correctly. Many installers will offer this service as part of the
installation, this should be checked in the installation contract but it is important for
community groups to understand the servicing requirements of their particular system.
There will also be insurance, equipment replacement, reporting and accounting.




25
Study into the potential of community owned hydro electric
generation in Carmarthenshire
According to the Environment Agency23 there are presently 37 hydro-electric schemes
installed across Wales ranging from large reservoirs of many MWs to small farm systems of
a few kWs. Nearly 30% of all Welsh hydro schemes have been installed in the Brecon
Beacons since 2006 by the founders of The Green Valleys. It is unlikely that hydro power
will provide more than about 5% of Wales’ total electricity requirements in the future, but
for large parts of rural Wales it could become the principle source of energy generation, and
thanks to Feed-in Tariffs, a significant source of income to build resilient communities. The
Green Valleys have already identified the potential of micro-hydro in one village to be able
to generate over 100% of their total energy requirements (including heat and transport).

Considering the scale of hydro electric generation units being considered in this report, it
would be beyond the scope of this report to highlight every single stream in
Carmarthenshire that has potential for high head hydro electric generation without further
discussing the individual options that each site has for community involvement. Instead this
section will highlight areas where topography lends itself to hydro electric generation in
order to illustrate the potential in Carmarthenshire for such projects and provide an
inspirational and indicative overview.

Topography
As discussed in above, high head hydro systems require a significant drop in order to
generate energy via a turbine. The geography and geology of Carmarthenshire is varied with
no particular region enjoying a uniform topography however the regions more likely to
contain suitable topography are towards the west of Carmarthenshire, in particular those
areas of the county that fall within the boundaries of the Brecon Beacons National Park.
However this report will attempt to highlight suitable areas in all parts of Carmarthenshire.
Coupled with the gradient of a slope, the catchment area dictates the flow characteristics of
a waterway, smaller catchments will not only have a lowed flow rate but the flow duration
will be shorted following precipitation events.




       23
         The Environment Agency: Opportunity and environmental sensitivity mapping for
       hydropower in England and Wales http://publications.environment-
       agency.gov.uk/pdf/GEHO0310BRYF-E-E.pdf



26
Technique
By way of an indicative study into the potential for community owned hydro electric power
generation 10 sites have been chosen that show potential for hydro electric generation,
each site involves the participation of the Forestry Commission or the Brecon Beacons
National Park Authority and at least one other landowner. For each site the catchment area
has been mapped using Anquet Mapping and this data correlated industry standard
software to estimate the annual flow. This Low Flows software combined with detailed
mapping information allows the generation potential of each site to be accurately estimated
using the power generation equation referred to in figure . Once the generation potential
has been calculated The Green Valleys are able to accurately estimate the cost of
installation of these systems using up to date market prices for parts.

Also calculated were the number of average homes each installation could power and the
potential annual carbon saving in tonnes that each site represents.
The results of these desktop surveys are summarised in figure 10. The location of the sites
can be seen in figure 11 and can also be seen via an interactive Google map24.

     Site name    Location     kW      Output       Cost         Est.         Equiv.    Carbon
                              pote                                                     saving (t)
                               nt.     kWh pa                  Revenue        Homes
                                                                 pa
                                                                              supply


Avon             SN 79331     14     61702       £61,000      £14,500    20            31
Garwnant         23372
BBNPA




Afon Llechach    SN 80201     15     59343       £74,000      £14,000    20            30
BBNPA            25942




Afon Mihatach    SN 78704     43     177247      £158,000     £39,000    44            89
BBNPA            22717




24
  http://maps.google.co.uk/maps/ms?ie=UTF8&hl=en&msa=0&ll=51.964577,-
3.581543&spn=0.737847,2.694397&t=p&z=9


27
Afon Twrch         SN 80380         15       61356         £108,500     £26,766    34    42
BBNPA              22822




Nant Garw          SN 72187         79       283945        £270,000     £62,000    70    142
BBNPA              16339




Brechfa Forest     SN515324         9        11466         £74,832      £2,740     3     6
Forestry
Commission




Quarter bach       SN 74392         92       329057        £320,000     £72,000    82    168
BBNPA              15015




Afon Clydach       SN 74183         15       124,002       £92,045      £28,396    28    74
                   19040
BBNPA




Rhandirmwyn        SN 787 440       16       59366         £117,305     £13,001    13    30
Forestry
commission




Caio forest        SN 693 415       11       39139         123,372      8571       9     20
Forestry
commission




Total                               309      1,430,952     £1,399,054   £280,974   323   632




Figure 10 Summary of identified Locations in Carmarthenshire




28
Figure 11 Identified locations in Carmarthenshire

Geographical distribution summary
Examining the distribution of sizable Forestry commission sites in Carmarthenshire
highlights that the larger of the sites are, predominantly located in the west of the county
including Brechfa and Caio and those areas of Carmarthenshire within the Brecon Beacons
National Park. These sites remain sizable due to the upland nature of their locations which
makes them unsuitable for other types of agriculture. The upland nature also lends itself to
high head hydro electric generation. Although there are suitable sites in the west of
Carmarthenshire, there is much less publicly owned land available for hydroelectric
development.

Generation potential summary
The chosen sites vary in size and generation potential but all are feasible as investments.
From the 10 sites summarised above a total of 307kW could be generated representing total
of 1,345MWh of renewable electricity per annum. That is the equivalent to generating
enough electricity to power 306 out of the 84,555 homes in rural Carmarthenshire. The
energy that these 10 sites have the ability to produce compare favourably to proposed wind
farm development projects such as the controversial proposed wind farm development at
Llanllwni25.




25
     http://www.brynllywelyn.co.uk


29
Revenue summary
The 10 installations described summarised above have a combined value of £263,064 per
annum. With community owned generation this money can manifest itself in several ways
depending on the constitution of the group. For a company with shares, the revenue is an
added income that can be used to offset the high price of heating that is found in rural areas
where a quarter of homes suffer from fuel poverty 26, that is where a household spends
more than 10% of its income on heating bills. Describe total revenue, highlight potential for
this revenue.

For those community groups that have opted to keep revenue in one central account then
the monies can be spent within the group’s constitution on locally specific and locally
identified projects, allowing communities to make real and tangible changes without being
representing an unbalanced strain on Local Authority budgets.

Carbon saving summary
The total actual carbon saving that these 10 hydro electric installations represent is 582
tonnes per annum. Whilst this is a sizable figure in itself it does not account for the
intangible or immeasurable indirect carbon savings that they represent. These examples do
not take into account the individual fuel requirements of each installation and assumes that
all electricity generated will be exported to the National Grid for sale. In actual fact if a
landowner was to use some of the electricity themselves then this would not significantly
affect the revenue from the system but would represent a further carbon saving that this
report cannot account for. Furthermore the indirect carbon savings represented, although
immeasurable are expected to be significant27. The increased awareness of the importance
of the part that upland peat bogs play in the hydrological cycle means that agricultural
communities with interests in hydrological generation are more likely to avoid further
ecological and environmental degradation on these uplands in order to preserve an existing
and reliable income stream.




26
     http://www.fuelpovertycharterwales.org.uk/fuel-poverty-in-wales/
27
     http://www.nwo.nl/nwohome.nsf/pages/NWOA_79NMLP


30
Implications and Conclusions.
It is obvious, given the brief scoping exercise conducted in this investigation, that there is
good potential for significant renewable energy generation in Carmarthenshire using hydro
electric generation. Whilst it is known that Wales and Carmarthenshire has good potential
for wind powered generation, being ideally situated in the path of the prevailing south
westerly winds28, these schemes are often controversial 29 with objections raised regarding
landscape issues as well as some noise and public health issues30. Although micro hydro
electric generation will never be able to compete with large wind farm installations such as
the combined 40MW installations such as that planned at Mynydd Llanwlni31. They never
the less have the potential to make a significant contribution to national and UK energy
demands without the controversy that follows wind farms.

The combined predicted revenue of the 10 systems above comes to nearly £260,000 per
annum; this figure in itself is 0.065% of the total annual budget (£400,000,000) for
Carmarthenshire as a whole32. However the £260,000 represents 5.4% of the
Carmarthenshire county council’s total allocated budget for regeneration and 1% of the
budget allocated for redevelopment of public sector housing stock33. This revenue itself,
when distributed amongst share holders is worth more than its face value as it adds revenue
to the local communities’ multiplier effect34. When used centrally by a community group to
further locally specific environmental concerns the revenue represents a reduction in
pressure on central government in Cardiff allowing revenue to be used elsewhere whilst
continuing to promote environmental improvements.

The total revenue also represents an alleviation of pressure, albeit small, on the European
Union highlighting the potential that renewable generation has for not only regenerating
the agricultural community in Carmarthenshire and Wales but also for the redevelopment of


28
  http://www.ngfl-cymru.org.uk/cc-reducing-climate-change/cc-renewable-energy2/cc-windfarms/cc-
windfarm-locations.htm
29
     http://www.socme.org/ and http://www.turbineaction.co.uk/
30
  http://www.independent.co.uk/environment/green-living/are-wind-farms-a-health-risk-us-scientist-
identifies-wind-turbine-syndrome-1766254.html
31
     http://www.brynllywelyn.co.uk/the-project/bryn-llywelyn-wind-farm.aspx
32
     http://discovercarmarthenshire.com/business/index.html
33

http://www.carmarthenshire.gov.uk/English/council/budget/Documents/Statement%20of%20Accounts%2020
10.pdf
34
     http://financial-dictionary.thefreedictionary.com/Multiplier+Effect


31
the common agricultural policy in face of the World trade Organisation’s impending
restrictions on trade distorting tariffs35.

Finally, with the scientific community in almost unanimous agreement that the predicted
climate change is indeed human induced36, the year after year carbon saving that hydro
electricity and all other forms of renewable power generation represent, cannot be ignored
in favour of polluting fossil fuel dependent energy forms such as oil and gas, especially since
it is known that these sources are finite and that as sources deplete, these fuels will
experience increasing costs of extraction and increased demand and resulting in an increase
in price dictated by the observed laws of supply and demand37.

The Green Valleys believe that hydro electric power generation has the potential to
regenerate and re invigorate rural communities allowing them to make the changes, both
locally specific and national that they wish to see in their areas.

Although the evolution of the Feed in Tariffs dictates that local authorities cannot directly
fund community owned hydro electric installations without handicapping their regeneration
potential, it is clear that supporting this small scale industry can have significant long term
sustainable impacts on communities and ecosystems in Carmarthenshire.




35
     http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm3_e.htm
36
     http://www.globalissues.org/issue/178/climate-change-and-global-warming
37
     http://www.investopedia.com/university/economics/economics3.asp


32

				
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