Research conducted by the Renewable Energy Foundation has revealed that the UK failed to meet its 10% renewable electricity target for 2010. Specifically, only a 6.5% share of the UK’s 2010 electricity came from renewable sources. Elsewhere, a report carried out by Stuart Young Consulting indicated that wind farms are much less efficient than claimed, producing below 10% of capacity for more than a third of the time.
The report concluded that turbines “cannot be relied upon” to produce significant levels of power generation, a claim hotly denied by the wind industry. Given that billions of pounds in subsidies have been spent on renewable energy and especially the wind industry, which accounts for more than £5bn of subsidies since 2002, the value for money of this investment is being called into question.
Onshore wind energy has typically been something that has attracted opposition from local communities due to the size and perceived ugliness of the turbines used to harness the energy. The counter argument has often centered on their supply of renewable, clean energy and the UK’s need to move towards a decreased dependence on non-renewable sources. The data from the latest reports into the industry is likely to provide ammunition to those opposed to the construction of wind farms and local communities, as well as single-issue NGOs in and around planned construction sites. An additional issue with which the wind industry has to contend is the amount of subsidies it is receiving via consumers’ electricity bills.
A recent report from Ofgem showed that renewable subsidy has risen above £1bn, adding an estimated £13.50 to the average household electricity bill during 2010, at a time when the cost of power is becoming an ever greater consumer issue. The positives of wind farms appear to be being undermined. Indeed public protests against proposed wind farms appear to be stepping up in frequency and media presence. For example Druim Ba Say No Action Group’s plans to fly a blimp near the proposed wind farm to demonstrate the scale of the turbines and Yorkshire’s Megawatt Valley campaign against turbines along an arc of land across the Selby district and into North Lincolnshire.
From a reputational perspective, the increased negativity around wind farms poses an additional challenge to companies; they are tasked by the government with increasing Britain’s supply of renewable energy, of which wind is the most popular while at the same time, their association with wind energy construction is likely to damage their reputations with other stakeholder groups. Local communities opposed to the environmental and social impact of the company’s behaviour, customers due to overall higher power bills and potentially shareholders due to the complicated and often prolonged planning process which frequently results in lengthy and costly overruns. This is a classic reputational conundrum in which the expectations of multiple stakeholders must be assessed, prioritised and, if possible, reconciled.
The UK wind sector faces charges of blighting the landscape, unreliability, unpredictability and cost-inefficiency, yet at the same time, the government is applying pressure to utilities to speed up the construction of wind farms in order to hit increasingly unrealistic targets. The reputational threat posed to the sector and companies who seek to harness wind energy from multiple stakeholder groups is becoming an increasingly difficult balancing act.
Alva calculates its reputation scores on a 1 to 10 fractional value basis, which represents the perception of various stakeholders and market segments at any given point in time. The scores are based on the daily analysis of over half a million news and financial announcements, trading and analyst reports and social media comments.
—- Nicholas Chrysanthou, energy consultant analyst at Alva