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Last Updated: Friday, 22 February 2008, 22:53 GMT
Renewables shift is big business
By Simon Gompertz
Working Lunch

Wind turbine in Alto Minho, north of Portugal

"This challenge will create a new industrial revolution," says Portugal's economy minister, Manuel Pinho, talking to BBC2's Working Lunch about his country's dash for renewable energy.

So, how many wind turbines does it take to cook up an industrial revolution?

Imagine that you already get two fifths of your electricity from renewables, chiefly wind and hydro.

You could mix in another thousand or so big wind turbines over the next couple of years to get you going. Then add ten new dams, as well as solar and wave power, and you are well on your way.

This is just about where Portugal's government thinks it is at the moment as it addresses to climate change.

'Cost of inaction'

Mr Pinho is a modest, thoughtful man, with a background in banking and economics. The economics of Portugal's task seem plain to him.

Pelamis metal snakes
Portugal has the first commercial wave farm in the world

"We feel that the countries that move first will have the advantage," he says dryly, "The cost of inaction is tremendous."

Anyone who read the Stern Review on the economic trouble likely to be caused by climate change will know what Pinho means about the cost of doing nothing. But Portugal is concentrating on the industrial opportunity of doing something.

You get a glimpse of what's happening on the mountaintops above the Minho river valley in the far north of the country.

The renewable energy enthusiast sees the largest wind farm in Europe under construction, as part of Portugal's plan to derive 60% of its electricity from renewables by 2020. Instead of burning fossil fuels, the wind's power is harnessed.

But for the area around the Minho and down the north coast nearby, the wind farms being built conjure up two words: jobs and money.

Industrial decline

Money flows in because anyone who sets up a turbine on community land has to pay a rental to the nearest towns or villages.

For the huge Alto Minho wind farm, with its 120 turbines, the rate is set at 5,000 per turbine per year.

And the jobs are being created in an area of industrial decline, centred on the port of Viana do Castelo. Ports, dockyards, textile factories have all been shedding workers.

"Factories are closing," says Marco Lajoso, a maintenance worker at Alto Minho, "with renewable energy we can get a lot of people working."

There are about 150 people working on the Alto Minho project, but they are only a fraction of the wider picture.

Constructing turbines at Alto Minho
About 150 people are employed constructing turbines at Alto Minho

A government plan has created 2,000 jobs in manufacturing for wind farms in the area. A further 6,000 will be employed supplying and servicing the industry.

And 19 factories are either being built from scratch or refurbished, five of which will be making wind turbine components in Viana.

Portuguese taxpayers

Although the turbines in Alto Minho are designed by a German company, Enercon, 90% of each one will be made in Portugal.

The plan is costing Portuguese taxpayers hundreds of millions of pounds. Dealing with climate change has become an instrument of industrial policy.

"Not only are we generating electricity instead of importing fuel to burn in power stations," enthuses Carlos Pimenta a former politician who is overseeing the Alto Minho project, "But we are creating jobs, creating equipment, exporting equipment and creating value."

Mr Pimenta says that the new factories have already exported the equivalent of 225m of turbine equipment.

Carlos Pimenta
Former minister Carlos Pimenta claims renewables are good for Portugal's economy

The other side of this industrial master plan consists of the financial bait held out to private sector companies to lure them into investing in renewable energy projects.

Portugal offers them what's called a feed-in tariff. The developer or investor is promised an attractive fixed price for each kilowatt hour of electricity, to be guaranteed over a set period, usually 15 years.

Money pours in

As long as the price is attractive enough, compared with the capital which has to be invested, then the project becomes a cast iron investment.

The money pours in from investors. It's no surprise that wind power capacity has shot up four times in less than three years.

Ian Sharpe from the Australian financial group Babcock & Brown is one such investor.

"Each kilowatt hour of electricity we produce, we know what we are going to receive for that," he explains when we meet at the Candeeiros wind farm north of Lisbon. The farm has 37 turbines, each 78m high and generating 3MW at peak power.

The UK, in contrast, leaves generators to sell their renewable power at a market price, but rewards them with a fixed subsidy per megawatt, paid in the form of Renewable Energy Certificates.

"If this wind farm was in the UK we'd be receiving a much higher price," Ian Sharpe reveals, "The difference here is that it's a lower price but it's certain over a longer term. As investors we're much happier with that."

Commercial wave farm

Serpa solar power station
The 52,000 panel installation at Serpa will soon be surpassed as the country's biggest

Feed-in tariffs are being used to boost solar and wave power.

Three British-designed wave machines are floating in the dock at Porto. Engineers are waiting for a break in the weather so they can be installed at sea. They will form the world's first commercial wave farm.

The price promised for the power is 18p per kWh. Compare that to the current market price of 5p paid for conventional power in the UK.

Portugal is building the biggest solar power station in the world at Moura on the sun-baked Alentejo plain. But until Moura is finished, the country's biggest solar venture is at Serpa nearby, which boasts 52,000 solar panels.

Serpa's feed-in price is 23p per kWh, quite enough to satisfy its backer, GE of the United States, for 15 years.

Mr Pimenta believes that countries must focus on the advantages of planned investment in renewable power.

"You should do it. That's the way forward," he says.

Are you happy to pay more for greener electricity, or are you a wind and wave sceptic?

Please click here to send your comment to Working Lunch.

Green energy wins over Portugal
19 Feb 08 |  Working Lunch
The green west coast of Europe
25 Feb 08 |  Working Lunch
Staking all on a renewable future
22 Feb 08 |  Working Lunch


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