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6/4/2011 — Renewable Energy
Windflow has fingers crossed on tariff review in the UK

The Christchurch-based wind turbine maker Windflow Technology Ltd (NZAX: WTL) has its fingers crossed that a review in the United Kingdom on the Feed-In Tariff (FIT) won’t undergo major changes under the UK Government.

In a market update Windflow said that the UK Energy Secretary has announced a comprehensive review of the FIT scheme following growing evidence that large scale solar farms could soak up money intended to help homes, communities and small businesses generate their own electricity.

Windflow said the FIT review will assess all aspects of the scheme including tariff levels, administration and eligibility of technologies, with tariffs remaining unchanged until April 2012 -- unless altered by the review.

“Previously the tariffs were not expected to change until April 2013 at the earliest. The outcome of the review may be as late as the end of the year but the market expectation in the UK is that information will be released before the parliamentary recess in July,” Windflow said.

The NZ company said while this review was causing some uncertainty, according to Windflow’s UK distributor, VG Energy Ltd, “the market anticipates the review will not substantially change the FIT terms as they relate to wind generation.”

This market belief was based on the review being accelerated due to the expected use of the FIT by large scale solar arrays. The policy targets for new generation from wind turbines are yet to be achieved, and accordingly this element of FIT should remain largely unaffected.

In recent statements Windflow has said that development of the UK market for its Windflow 500 turbine was going to be a key financial driver for the company in the near term.

Windflow’s chief executive Geoff Henderson said Windflow and VG Energy were continuing to work together to achieve initial sales.

“In anticipation they are progressing the various contractual and financial arrangements needed to confirm orders, while continuing to expand and progress the existing pipeline of prospective orders,” Henderson said.

“An example of this progress is that the first Windflow 500 turbine was granted planning permission in South Lanarkshire in December.

Henderson said the prospects for orders from the UK have increased since the date of the prospectus. However, the enormous interest arising from the FIT has overwhelmed the resources available to councils and power companies, resulting in delays to the processing of planning applications and line surveys.

Combined with the effect of the FIT review, the upshot is that the first UK orders for Windflow 500 Turbines may be delayed until after June 2011.

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Windflow’s Geoff Henderson.