Copyright 2003 Aberdeen Press and Journal
Aberdeen Press and Journal

November 11, 2003

SECTION: News; Business; Energy/Utilities; Pg. 6

LENGTH: 398 words

HEADLINE: Energy Firms' Profits Are Leaked In Report

BODY:
A Confidential report detailing the potentially huge profits to be made by
alternative energy developers has been leaked by Highland councillors.
Council bosses say they are concerned at the "cosy arrangement" between the
industry and the Scottish Executive to keep the true extent of the profits
from the public.

They are also concerned that council officials have been slow to alert
communities in the region about potential gains.

The report - An Evaluation of Alternative/Renewable Energy Schemes - was
prepared by IPA Energy Consulting, for Western Isles Council and Highland
Council.

The document details examples of a number of renewable energy projects, from
small-scale hydro schemes to large-scale offshore wind farms.

The profit and loss statement for a 200MW offshore wind farm shows it would
produce an income of £1,020.8million over 20 years.

The annual costs for a utility developer which include maintenance,
transmission charges, rates and insurance, are set at £229.07million.

The construction costs are assumed to be £750,000 for every installed
megawatt, giving a capital cost of £150million, leaving the total cost of
£379.07million. The overall profit is therefore calculated at £641.73million
over 20 years.

The capital cost is paid off after four years, and the generating company
quickly achieves an average income of about £45million a year.

The document also reveals developers are more likely to get planning
approval in Scotland, with a 90 approval rate compared to 50 in England.

The figures tie in with those in a Highlands and Islands Enterprise study
which said "a conservative estimate of income from a 1MW turbine would be
£100,000 a year, subtracting operation and maintenance costs".

At a meeting last week, Francisco Ascui of Edinburgh- based IPA Energy
Consulting, told councillors that communities and landowners were getting
very little in terms of community benefit from developers compared with the
profit made by the companies themselves.

The income for companies was likely to rise and then remain consistently
high for the next 15-20 years, he added.

A Scottish Executive spokeswoman said she had not seen the report and was
therefore not able to comment on it directly.

However, she said the Executive was "fully committed to exploiting
Scotland's huge renewable energy resource".



LOAD-DATE: November 12, 2003