Oversight Poor riskcostbenefit distribution

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Any excessive burden without equivalent benefit for a given stakeholder (whether local, regional or national) is likely to result in some sort of opposition to renewable energy developments. It is a dangerous and potentially irreversible policy oversight to assume that this balance will occur by itself or assume it to be outside the role of policy-makers.

Box 2.5 The embedded generator and the distributor's killer move

Imagine a small run-of-river hydroelectric scheme, located at the end of a long grid line that requires lots of upkeep and wastes ample energy through line losses. The hydro developer has a power purchase contract with a utility in the city, but the developer plans to take advantage of the savings she can offer to the local utility to make up the project income. 'I can save the local distribution company from having to upgrade that old line and also reduce their line losses. If they give me a portion of these avoided costs my project becomes viable!'

But the local distribution company has different ideas. 'You're producing electricity here and selling it in the city. That means you need to pay us to get it there for you,' they argue.

'Hang on,' says the developer. 'In principle that's true, but in practice I'm just reducing the amount of electricity you need to pull down that line, which reduces your service costs to the transmission operator. You should pay me.'

Then the local distributor makes his killer move. 'I decide who gets connected and on what terms. Take it or leave it.'

In practice this means that the benefits of renewable energy accrue at different levels. Pollution mitigation occurs at a global level, inward investment occurs at a national level, manufacturing and employment creation can occur at a regional level and some employment will occur at the very local level. However, the direct

Figure 2.9 The drivers and context will largely define the risks, costs and benefits to local, regional and national stakeholders

physical impacts occur at a local level only. If the actual or even perceived impacts are significant local people may object to a project. We will consider this issue in more detail below with respect to planning.

There may be many ways to minimize or reassure local people about what the actual impact of a project will be. However, there is also the avenue of increasing or targeting additional benefits to help achieve a desirable balance for a given set of stakeholders.

Experience in Denmark indicates that there is a strong link between local social acceptance of renewable developments and local ownership. As we will elaborate in the next chapter, the highest concentration of wind turbines in the world occurs in a place called Sydthy, Denmark. The reason that the community accepts and allows so much wind development may be explained by the fact that 58 per cent of the households in Sydthy have one or more shares in cooperatively owned wind turbines.

This use of the benefit of equity ownership (encouraged in Denmark by favourable government tax policies targeted at residents local to projects) balances risks in a way that leads to much greater acceptance of projects and their impacts.

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Renewable Energy Eco Friendly

Renewable Energy Eco Friendly

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable.

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