Through our operation of Rheidol, the largest hydroelectric power station in England or Wales, we have over 40 years' experience of renewable generation. We have also been generating electricity using wind power since the early 1990s and over the last five years, we have invested over £200 million in renewable projects, mainly onshore and offshore wind schemes, and we want to double that over the next few years. We have a total wind and hydro capacity of 253MW. We are now also evaluating tidal and wave technologies.

The Renewables Obligation

The Renewables Obligation (RO) is a Government mechanism to encourage investment in renewable energy. It encourages suppliers to source increasing percentages of the electricity they sell (6.7% in 2006/07 rising to 15.4% by 2015/16) from renewables. Renewable Obligation Certificates (ROCs) are issued to suppliers by generating companies to prove that the electricity bought has come from renewable sources. Each ROC represents one megawatt hour (MWh) of electricity generated from renewable sources. Supply companies that fail to present Ofgem with ROCs covering the full amount of their renewables obligation must make a balancing payment into a buy-out fund.

In compliance period 4 (CP4) the E.ON UK group of companies:

• had a total RO of 3,081,587MWh
• surrendered 2,930,383 ROCs, of which:
  • 397,545 were biomass co-fired with coal (from a combination of our own assets and trades)
  • 435,925 were from our own assets
  • and the remaining ROCs were purchased.

This meant that E.ON UK achieved a 95% level of compliance with the RO in CP4. See OFGEM 2005-06 (CP4) RO Report for more details on CP4.

Additionally:

• the total RO for CP4 was 18,032,904 MWh
• the total number of ROCs submitted was 13,699,317
• the overall level of compliance was 76%.

The E.ON UK group of companies accounted for 21% of all the ROCs submitted in CP4. Therefore, with reference to the table below,   the E.ON UK group of companies submitted the largest amount of ROCs by any supplier.

Renewable Generation Capacity, MW

	2006
Hydro	56
Wind	197

Wind and Hydro capacity are dedicated and include all wholly and partially owned assets.

Rheidol hydroelectric power station has a maximum capacity of 56MW but is operated at a nominal capacity of 49-50MW.

We also have the capability to co-fire biomass with coal. This gives a further theoreticcal capacity of around 410 MW.

253 is the maximum dedicated renewable electricity generation capacity. Please note that Rheidol hydroelectric power station nominally runs below maximum capacity.

Our total dedicated renewables capacity (ie wind and hydro) is currently 253MW, with nearly two-thirds of our potential capacity provided by co-firing of biomass at three of our fossil fuel-fired plants.

Wind power

We have interests in 18 onshore and two offshore wind farms, including one of the UK's first commercial offshore schemes, the 30-turbine 60MW Scroby Sands development in Norfolk. During 2005, we submitted planning applications for a further six onshore sites with a total capacity of 225MW. With our joint venture partners CORE Ltd, an Anglo-Danish partnership, and Shell WindEnergy Ltd, we also submitted applications to build the London Array offshore wind farm in the outer Thames Estuary 12 miles off the Kent and Essex coastlines. This 1,000MW venture will be the biggest wind scheme in the world and could provide renewable energy for a quarter of Greater London, while achieving 10% of the Government's 2010 renewable targets. It would also displace the emissions of nearly two million tonnes of   CO₂ each year. The UK Government gave consent for the offshore sections of this project in December 2006.

In 2005, we acquired the wind portfolio of United Utilities, which included a share in two joint venture companies developing the Scarweather Sands and Humber Gateway offshore wind farms, and the rights to develop several onshore wind farm sites. The acquisition has the potential to increase our renewables capacity by a further 500MW if all the projects come to fruition.

We apply a careful and rigorous process to the selection of sites, including taking into account local opinion and concerns about the effect on the natural habitat.

From our control room at Rheidol, we use an advanced computerised system to manage our wind farm operations. Called SCADA (Supervisory Control and Data Acquisition System), this technology allows us to monitor the performance of our sites and predict and react to network demand.

Hydroelectricity

We have owned and operated Rheidol power station, the largest hydroelectric scheme in England and Wales for over 40 years.

Hydroelectric power stations generate electricity using the energy in flowing water. Water is released from a reservoir and the kinetic energy of the falling water is used to drive turbines which in turn drive a generator to produce electricity. Hydroelectric power stations can start generating electricity within a matter of minutes and so play a crucial role in meeting peak demands.

Hydro schemes also bring benefits to local communities by creating local employment opportunities and acting as a focal point for tourism and education.

Marine

The UK has some of the largest wave and tidal resources in Europe and this is one of the most important areas of growth for renewable energy. We are investigating a number of ways in which to harness the power of the ocean and in 2006 we announced an agreement with Ocean Prospect to develop a potential 5MW tidal stream project called 'WestWave'. This is located on the seabed 10 miles off the Cornish coast and could potentially supply enough electricity for around 3,000 households.

Biomass

Burning biomass (a general term for any plant-derived organic matter) to generate electricity is 'carbon neutral', since the CO₂ released during combustion is equal to the amount that was absorbed by the plants as they grew, with an equivalent amount being absorbed by the plants planted to replace those burned under sustainable farming and forestry conditions. During 2006, we generated 217 gigawatt hours (GWh) by this method at our Kingsnorth and Ironbridge power stations. We are also building a 44MW wood-burning plant at Steven's Croft near Lockerbie, in Scotland. This will be the UK's largest dedicated biomass power station, generating enough electricity for around 70,000 homes.

The station is due to be completed by the end of 2007.