The case for a Severn barrage has been debated for the last 15 years. With a tidal range only exceeded by the Bay of Fundy in Canada, the possibilities of renewable energy generation have been endlessly rehearsed. A barrage stretching across the wide mouth of the estuary from south Wales to the northern coast of Somerset could hold the turbines that – judging by the example of the only European example now in place, at the mouth of the river Rance in Brittany– could generate electricity both from the incoming tide and the normal river outflow.

It’s an enticing prospect, albeit a very expensive one to build, but it rises on the political agenda with every hike in the costs of fossil fuels. With demand for hydrocarbons falling as economies drift into recession, the immediate appeal of the Severn barrage will subside. But as demand goes up and the costs rise, the case for the barrage will be back.

The Rance barrage shows the potential. Energy pressures on France have been acute since the 1870 war robbed the economy of the Alsace-Lorraine coalfields. France tried everything in the years that followed: hydroelectricity wherever the mountains provided gravity fall; solar power where the sun was strong enough. The final answer was nuclear and 50 reactors were built throughout France. They are now the dominant source of electricity and the EDF bill at my Breton retreat tells me that power there is 88% nuclear-generated. And, to be fair, the kilowatt price is rather below the one British generators charge to UK consumers.

The opposition to the Severn barrage – which is powerful, especially with a new proposal for tidal lagoons and turbines rather than a “strip barrier” – reflects the importance of the Severn estuary as a wildlife corridor, a description very much to the taste of the Gloucestershire Wildlife Trust. Historically, the annual migration of eels from the Sargasso Sea saw them swimming up the Severn each spring after their long haul across the Atlantic. Gloucestershire residents then swept them up from the bank in large nets. They knew the eels would sell well in Europe, where they enjoy a reputation as an aphrodisiac. Locals ate the surplus with a plate of bacon and eggs. Competition for nets and fishing spots was intense and violence was not unknown.

But the eels were not the only conservation issue. The Severn valley in its lower course has elements of wilderness and the water meadows there were one of the very few areas where I might hope to see snipe. The ornithologist Sir Peter Scott established Slimbridge in Gloucestershire as the headquarters of the Wildfowl & Wetlands Trust and it continues to be a major winter refuge for migrant waterfowl. Bewick’s swans and white-fronted geese figure among a host of winter visitors including wigeon, teal, lapwing and dunlin, along with ruff, redshank, and black-tailed godwits. The success of the reserve brings visitors throughout the year as well as providing food and safety to the migrant birds that pair and nest on Siberian tundra but overwinter in Britain.

If the barrage is built, what is the likely impact on Slimbridge and its live, flowing waters? Again, the Rance barrage provides a good example. The landward side is quiet watermeadow land with a much-reduced river flow to the turbines. Essentially, the effect of a barrage is to slow the exit speed of the river water, which now has to power the turbines before reaching the estuary and the sea. Polluted seas mean the eel population is smaller than it used to be, but any barrage would have to take them into consideration. Slimbridge is far enough upriver to be unaffected by the construction work, but the maintenance of the river level and the speed of the flow would be critical to the health and welfare of the birds – particularly the migrant population. Would they continue to return to their winter feeding sites?

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Mention energy and Iran in the same sentence and you’re duty-bound to express some concern about the country’s ambitions for nuclear power and, as a result, raise dangerous questions about weapons. But while that are-they-aren’t-they game has been going on between the country’s leaders and the wider international community, renewable energy experts in Iran have been quietly working on capturing sunlight to power their country.

According to officials, Iran has started 2009 by inaugurating a pilot solar plant in Shiraz, Fars province. It is a concentrating solar power (CSP) system, using parabolic mirrors to focus sunlight onto a tube of water that is super-heated to make steam that is then used to turn electricity-generating turbines.

According to the Mehr Iran news agency, Iranian energy minister Parviz Fattah said: “The country backs the use of alternative and renewable energy sources. In future alternative energy sources will be greatly developed in the country. The growth of investments in this sphere is expected.”

The solar radiation hitting the Earth contains around 10,000 times the energy needs of the world’s population. CSP is seen by many as a simpler, cheaper and more efficient way to harness the sun’s energy than other methods such as photovoltaic panels. But it only works in places with clear skies and strong sunshine. As such, large CSP plants of up to 20mw each are already in construction in the sunnier parts of the world.

Spanish firms, in particular, are moving quickly with CSP: more than 50 solar projects around Spain have been approved for construction by the government and, by 2015, the country will generate more than 2GW of power from CSP, comfortably exceeding current national targets. The companies there are also exporting their technology to Morocco, Algeria and the US.

At present the Iranian plant is small (just 250KW, probably enough for just over 200 family homes while the sun is shining) but the locally-
built mirrors join thousands of smaller-scale solar-thermal installations already in place around the country.

Whether Iran has plans to build bigger solar plants or add photovoltaic panels to those plans is unclear, but an ambitious move in this direction would be a good idea. Not only because the region has a huge resource of sunlight falling onto it, so tapping even a small proportion of that would be a cheap and clean way to provide energy for the country. But, just perhaps, solar plants could also placate those international observers that are suspicious of President Mahmoud Ahmadinejad’s nuclear plans.

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For a while it seemed that Shell had stopped pretending. The advertisements that filled the newspapers in 2006, featuring technicians with perfect teeth and open-necked shirts explaining how they were saving the world, vanished. After being slated by environmentalists for greenwash, after two adverse rulings by the Advertising Standards Authority, Shell appeared to have accepted the inescapable truth that it was an oil company with a minor sideline in alternative energy, and that there was no point in trying to persuade people otherwise.

The interview I conducted with its chief executive, Jeroen van der Veer, broadcast on the Guardian’s website today, contains what appears to be an interesting admission. I asked him whether Shell had stopped producing ads extolling its investments in renewable energy. Van der Veer does not express himself clearly at this point, but he seems to admit that his company’s previous advertising was not honest.

“If we are very big in oil and gas and we are so far relatively small in alternative energies, if you then every day only make adverts about your alternative energies and not about 90% of your other activities I don’t think that - then I say transparency, honesty to the market, that’s nonsense.” So, I asked, Shell did not intend to return to that kind of advertising? “Probably not,” he told me. “I’m very much: keep your feet on the ground, tell them who you are and explain why you are who you are.”

But since the interview was filmed, Shell’s messianic tendencies appear to have resurfaced. In December the company ran a series of ads in the Guardian suggesting again that it had come to save the world. “Tackling climate change and providing fuel for a growing population seems like an impossible problem, but at Shell we try to think creatively,” one boasted. It features a diagram of a human brain, divided into sections labelled “fuel from algae”, “fuel from straw”, “fuel from woodchips”, “hydrogen fuels”, “windfarm”, “gas to liquids” and “coal gasification”. This suggests progress of a kind, in that the company is acknowledging that it sometimes dabbles in fossil fuels, but its core business - oil - and its massive investments in tar sands extraction are missing from the corporate mind. Could Shell be having a senior moment?

The confusion deepens when you watch its latest publicity film. It’s called Clearing the Air, and it does just the opposite. It is supposed to tell an inspirational tale of discovery, but the script and the acting are so gobsmackingly bad that it inspires you only to rip your clothes off and run screaming down the street. The lasting impression it leaves is that Shell’s staff are chaotic and incompetent. Perhaps the clean-cut corporate clones featured in the ads of 2006 put people off.

Jeroen van der Veer is neither an incompetent nor an automaton. He is charming, friendly and smart. But he refused to answer some of the questions I had prepared.

Reading Shell’s reports and publicity material, I kept stumbling on an absence. In 2000, the company boasted that it would be investing $1bn in renewable energy between 2001 and 2005. But since then it appears to have produced no figures for its renewables budget. The company now claims that it is “investing significantly in wind energy”, but it doesn’t say what “significantly” means. Of the 10 windfarms listed on its website, only one appears to be in the planning or development stage: the others are already in operation. Where is the evidence of new money? When Shell pulled out of Britain’s biggest windfarm, the London Array, last year, did this represent the end of its major investments?

I asked Van der Veer a simple question - 15 times. (Only a few of these attempts feature in the edited film.) “What is the value of your annual investments in renewable energy?” He waffled, changed the subject, admitted that he knew the figure, then flatly refused to reveal it. Nor could he give me a convincing explanation of why he wouldn’t tell me, claiming only that “those figures are misused and people say it is too small”, and it “is not the right message to give to the people”. It strikes me that there is only one likely reason for these evasions: that Shell’s spending on renewables has fallen sharply from the figure it announced in 2000. It’s a fair guess that the current investment would look microscopic by comparison to its spending on the Canadian tar sands, and would make a mockery of its new round of advertising. I challenge Shell - for the 16th time - to prove me wrong.

Nor would Van der Veer give me a straight answer to another straight question: “Is there any investment you would not make on ethical grounds?” I asked this six times. He was unable to furnish me with an example. It’s not hard to see why. As well as exploiting the tar sands, which means destroying forest and wetlands, polluting great quantities of water and producing more CO2 than conventional petroleum production, Shell is still flaring gas in Nigeria, at great cost to both local people and the global climate. It has been fiercely criticised for its secret negotiations with the Iraqi government, which led last year to the first major access for a western company to Iraq’s gas reserves. It is prospecting for oil in some of the Arctic’s most sensitive habitats.

All this makes my question difficult to answer. Aside from the greenwash, it is not easy to spot the practical difference between this civilised, progressive company and the Neanderthals at Exxon.

Like all oil companies, Shell simply follows the opportunities. Shut out of the richest fields by state companies, struggling to extract the dregs from its declining reserves, it has been turning to ever more difficult oil extraction, some of which lies beneath rare and fragile ecosystems. When the price of oil was high, it announced massive investments in the tar sands. Now the price has dropped again, it has cancelled further spending. It has even less of an incentive to invest in renewables. Shell does what the market demands.

I don’t blame Shell or Van der Veer for this: they are discharging their duty to their shareholders. I do blame them for creating the impression that the company has a different agenda, and I blame governments for allowing them to drift into whatever fields they find profitable, regardless of the consequences for people or the environment.

On this issue Jeroen van der Veer and I agree. Oil companies, he says, should not seek to determine a country’s energy mix: that is for the government to decide.

Saving the biosphere, in other words, cannot be left to goodwill and greenwash: the humanity of pleasant men like Van der Veer will always be swept aside by the imperative to maximise returns. Good people in these circumstances do terrible things. Companies like Shell will pour big money into alternative energy only when more lucrative or immediate opportunities are blocked. Where is the government that is brave enough to block them?

monbiot.com

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Government consultants have been accused of miscalculating the costs of a project to generate vast amounts of green electricity in the Severn estuary, promoting a 10 mile-long tidal barrier strongly backed by ministers over a scheme engineers and environmentalists say is far less damaging.

US engineering company Parsons Brinckerhoff has been hired by the Department of Climate Change and Energy to assess different technologies that could generate up to 7% of all the UK’s electricity from the estuary, which has the second highest tidal range in the world. Its feasibility study has been sent to ministers who will shortly announce a shortlist of potential schemes based on their assessment. Finding a way to harnessing the power of the Severn’s tides is important as it would represent a very big step towards Britain’s ambitious target of generating 35% of all its electricity from renewable sources by 2020.

Sources in Decc say the firm favourite is the 10-mile barrier, which would span the entire estuary and is estimated to cost £14bn. PB say it could generate 5-8.6GW of renewable electricity at the cost of about 3p/kwh, but would impede shipping, and permanently flood more than 100 miles of shoreline. Ministers have already called the scheme “visionary” and a “trailblazer for clean, green energy”.

But correspondence seen by the Guardian shows that a row has broken out between PB and a company promoting a scheme that major environmental groups and other engineers claim would be far less damaging, cheaper and more efficient. Tidal Electric Ltd is seeking to generate electricity by using tidal “lagoons” built on the estuary floor from rock. Up to 13 lagoons would be dotted around the estuary, not across it. These would trap water at high tide and release it later through electricity-generating water turbines. Studies carried out by a major engineering firm, AS Atkins, for the Tidal Electric has suggested the lagoons could generate twice as much power per square mile impounded than the barrage and therefore generate about 25-40% more energy without damaging the shoreline.

However, the calculations sent by PB to ministers argue that the tidal lagoon option is eight times more expensive than the barrage scheme and would not generate as much power. “PB has made huge miscalculations. It has submitted [to ministers] cost numbers on power from tidal lagoons that are roughly 800% higher than all the previous studies of tidal lagoon power conducted by UK engineering giant WS Atkins and corroborated by AEA Technology, OFGEM and Rothschild Bank. They have arrived at their extraordinarily high numbers by ignoring the technology developer’s design parameters and introducing their own design,” said Peter Ullman, chief executive of Tidal Electric.

One key issue is that Tidal Electric’s plans to site the lagoons in shallow water, while PB assumes they would be built – at a higher cost – in deeper water.

“They have made basic mistakes and made O-level miscalculations,” added Ullman.

Tidal Electric is backed by many leading environment groups, including the Royal Society for the Protection of Birds, and Friends of the Earth, as well as a vocal West Country lobby which argues that a barrage would be ecologically and socially disastrous . According to the Bristol-based Stop the Barrage Now group it would add to local flooding, reduce fish stocks, damage bird life and destroy the Severn bore, as well as ruining mudflats across a 20,000 sq km area. In addition, they argue that the barrage would impede shipping, adversely affecting ports including Bristol, Sharpness, Gloucester and Cardiff and putting thousands of jobs at risk.

A PB spokesman said: “We are unable to comment on Mr Ullman’s complaint, but it is important to stress that during the selection process all options have been technically assessed to a common engineering and cost baseline, the same technical and energy yield approach has been applied to all options and the process and outcomes have been subject to peer review. The selection process is reviewed by an independent panel of experts appointed by Decc.”

In correspondence with Tidal Electric, seen by the Guardian, PB executives note that the consultation will continue: “There [will be] ample opportunity for dialogue to continue even though the public consultation documents are in the final stages of preparation. The public consultation process provides you with the opportunity to formally respond to the consultation documents, which will include our appraisal of the long-listed schemes. If the offshore lagoon concept is shortlisted, specific optimisation of proposals will be carried out in the next phase, which will require further dialogue.”

A range of barrage studies were made between 1974 and 1987 at a cost of £65m, out of which a specific Severn barrage scheme was drawn up by the Severn Tidal Power Group. A revised report was published in 2002 but all plans were rejected at the time as being too expensive or ecologically damaging.

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Propellers on ships have been tried and tested for centuries in the rough and unforgiving environment of the sea: now this long-proven technology will be used in reverse to harness clean energy from the UK’s powerful tides.

The tides that surge around the UK’s coasts could provide up to a quarter of the nation’s electricity, without any carbon emissions. But life in the stormy seas is harsh and existing equipment – long-bladed underwater wind turbines – is prone to failure.A Welsh renewable energy company has teamed up with ship propulsion experts to design a new marine turbine which they believe is far more robust.

Cardiff-based Tidal Energy Limited will test a 1MW tidal turbine off the Pembrokeshire coast at Ramsey Sound, big enough to supply around 1,000 homes. Their DeltaStream device, invented by marine engineer Richard Ayre while he was installing buoys in the marine nature reserve near Pembrokeshire, will be the first tidal device in Wales and become fully operational in 2010.

To ensure the propeller and electricity generation systems were as tough as possible, the tidal turbine’s designers worked with Converteam, a company renowned for designing propulsion systems for ships. “They’ve put them on the bottom of the Queen Mary … and done work for highly efficient destroyers, which is exactly the same technology that we’re looking at here,” said Chris Williams, development director of DeltaStream.

DeltaStream’s propellers work in reverse to a ship’s propulsion system – the water turns the blades to generate electricity – but the underlying connections between blades and power systems are identical to those on the ship.

Tidal streams are seen as a plentiful and predictable supply of clean energy, as the UK tries to reduce its greenhouse gas emissions. Conservative estimates suggest there is at least 5GW of power, but there could be as much as 15GW – 25% of current national demand.

A single DeltaStream unit has three propeller-driven generators that sit on a triangular frame. It weighs 250 tonnes, but is relatively light compared with other tidal systems which can be several times heavier. The unit is simple to install and can be used in closely packed units at depths of at least 20m. Unlike other tidal turbine systems, which must be anchored to the sea floor using piles bored into the seabed, DeltaStream’s triangular structure simply sits on the sea floor.

Duncan Ayling, head of offshore at the British Wind Energy Association and a former UK government adviser on marine energy, said that one of the biggest issues facing all tidal-stream developers is ease of installation and maintenance of their underwater device. “Anything you put under the water becomes expensive to get to and service. The really good bit of the DeltaStream is that they can just plonk it in the water and it just sits there.”

Another issue that has plagued proposed tidal projects is concern that the whirling blades could kill marine life. But Williams said: “The blades themselves are thick and slow moving in comparison to other devices, so minimising the chance of impact on marine life.”

The device also has a fail-safe feature when the water currents become too powerful and threaten to destroy the turbines by dragging them across the sea floor – the propellers automatically tilt their orientation to shed the extra energy.

Pembrokeshire businessman and sustainability consultant Andy Middleton said: “People are increasingly recognising how serious global warming really is, and in St David’s we are keen to embrace our responsibility to minimise climate change. DeltaStream is developing into a perfect example of the technology that fills the need for green energy and has the added benefit of being invisible and reliable.”

The country’s first experimental tidal turbine began generating electricity in Strangford Lough, Northern Ireland last year, built by Bristol-based company Marine Current Turbines. SeaGen began at about 150kW, enough for around 100 homes, but has now reached 1,200kW in testing. It had a setback early in its test phase, with the tidal streams breaking one of the blades in July.

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Low oil prices and the credit crunch are threatening to stall the green revolution. The value of crude has dropped from a summer high of nearly $150 a barrel to below $40, taking the wind out of the sails of turbine manufacturers and others ­trying to build low-carbon alternatives.

Jeremy Leggett, founder and executive chairman of Solarcentury, says: “Talk of the death of renewables is premature but clearly big solar farms and wind projects are being cancelled. Everything is suf­fering in the current climate but its my contention that the low oil price is a temporary thing and the growth of renew­ables will resume.”

Michael Liebreich, chief executive of information provider New Energy Finance, says his leading index of clean-technology companies has fallen from a high of 450 points 12 months ago to 175 points, hit by a triple whammy of lower oil prices, higher costs of capital and fear of more speculative start-up businesses.

But he too is confident that the sector can bounce back. “There was no doubt that there was a certain amount of irrational exuberance over the low-carbon economy. No industry in history has kept up the kind of 40% compound growth rates being ascribed to clean tech so share prices had run up too far and it was time for a correction.”

Clean-tech and renewables stocks have been struggling with more than just sentiment. Indian-based wind turbine manufacturer Suzlon Energy, which has seen its share price plunge by 90% this year, has also been hit by malfunctions and the kind of teething problems it says is are inevit­able with new types of technology.

Wind developers in the US have been cutting back in the face of tough new conditions. FPL Group, the US’s largest wind-power operator, is cutting its ­spending this year by nearly a quarter to $5.3bn (£3.7bn) and new wind-power generation from 1,500 to 1,100 megawatts.

Confidence in the sector has also been rattled by T Boone Pickens, a veteran oil man who delighted environmentalists with a very public conversion when he promised to build the world’s largest wind farm in Texas. He slammed on the brakes in November on the basis that lower oil prices had changed the economics of a scheme that would have powered 1.3m homes.

However the US wind sector has generally been faring better than the British one, thanks to tax breaks. Shell and BP have made it clear they are no longer interested in pursuing UK farms when the investment numbers stack up much better across the Atlantic.

The decision by Shell to pull out of the London Array wind farm was a particular blow to British confidence. The project has been billed as the biggest offshore scheme of its kind in the world but the oil company said the margins were too thin, leaving E.ON of Germany and Dong Energy of Denmark to go it alone.

Anton Milner, the chief executive of Q-Cells, the world’s largest manufacturer of solar cells, cut earnings forecasts recently after being hit by what he described as a “flood” of cancellations from developers of solar-power projects struggling to raise finance. The US manufacturer Evergreen Solar has since delayed an $800m new factory in Asia that would have manufactured enough solar cells to power a city of 500,000 people.

But most industry figures are convinced that though the threat of global recession is slowing down the industry, the future remains bright enough, especially with a new figure taking over the White House. Liebreich says his clean-tech index has seen an “Obama bounce”, rising from a low of 130 to 175 on the back of optimism about the incoming president’s policies.

A raft of radical political appointments – such as Nobel physics laureate Steven Chu as energy secretary – has convinced environmentalists that Barack Obama is serious about his stated aim of hastening progress towards a low-carbon economy with a green New Deal that will reduce his country’s dependence on imported oil.

A quarterly review of climate change-related business opportunities just published by analysts at HSBC says governments are increasingly active. “The engagement of governments has grown globally,” they say. “Across the political spectrum there is now more recognition that climate change is a genuine long-term global issue with real growth potential.”

Martin Wright, managing director of Marine Current Turbines, says no one should expect oil and gas prices to stay low. “Vladimir Putin has already said the era of cheap gas is over and no one knows when peak oil really will come about. So we can expect enormous price volatility, which all points to the need for Britain to develop an independent low-carbon alternative.”

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On the banks of the Firth of Forth, the giant Longannet power station dominates the winter sky line, a massive box in the shadow of its sky scraper chimney stack.

Conceived more than 40 years ago and completed at the beginning of the 1970s, long before climate change became a central plank of the energy debate, Longannet was designed with stunning industrial simplicity and symmetry.

Britain’s second-largest coal-fired power station was a product of a time when electricity generation was based on a technology now dismissed by a new generation of engineers, not entirely without affection, as “burn and boil”. You burned the fossil fuel, and used the heat to boil water which drove the turbines to generate electricity.

In Longannet’s case, the fossil fuel was coal from the mine alongside the power station. The waters of the Firth cooled the steam, giving the plant an unusual profile for a coal-fired station – no sculpted, rounded towers.

Today, Longannet is at the centre of owner Scottish Power’s plans to demonstrate there is more to coal than burn and boil; that despite opposition from environmentalists, it has a future in providing Britain and other countries with a key component in the pursuit of energy security, affordability and sustainability, and is not, as some critics argue, a 19th century nightmare haunting the 21st century.

In trying to make Longannet a centre for technological excellence, Scottish Power is turning the plant into a giant chemistry set. More than 1,000 contractors are putting the finishing touches to flue gas desulphurisation (FGD) equipment in three of the plant’s four turbines.

Fitting FGD brings Longannet into line with the European Union’s large combustion plant directive on reducing sulphur dioxide emissions, allowing it to run as required. Without FGD, it would run for only limited hours, and would have to close in 2015.

Life extension does not come cheap. According to John Campbell, director of energy wholesale at Scottish Power, the company is investing around £170m in FGD, while associated investments to extend the plant’s life have lifted the bill to £250m.

The scheme does have local benefits. Last year Scottish Power signed a five-year deal, worth up to £700m, with Scottish Coal to provide coal for Longannet and its smaller coal plant at Cockenzie.

At the time the deal was signed, Ignacio Galán, the chairman and chief executive of Scottish Power’s Spanish parent, Iberdrola, made clear his ambitions for coal and Longannet: “Coal generation has a significant contribution to the security of electricity supply in the UK today.”

The next stage is to fit Longannet with equipment to reduce emissions of nitrous oxides (NOX) to conform with impending legislation. The process uses ammonia and a vanadium pentoxide catalyst to turn the NOX into water and nitrogen. Fitting the equipment will cost “several hundred million pounds” and require greater political clarity, according to Scottish Power executives.

Work is also under way on a 25 megawatt biomass plant, using wood chip and peanut husks as well as dried waste.

The big issue, however, is carbon capture and storage (CCS). For fossil fuel burners this is a kind of holy grail, though one not yet available on a commercial scale. The theory is simply. Carbon dioxide is collected, transported and buried in holes in the ground.

The government is keen, and is running a competition to encourage the development of CCS. It could help the UK cut emission levels and be sold to power generators around the world.

But as Ed Miliband, the energy and climate change secretary, said in a speech last month, CCS is vital to reconciling the continuing use of coal with Britain’s emission targets.

He told a conference at Imperial College London: “Clean fossil fuels are a less sure prospect because of uncertainties around carbon capture and storage, the great prize of clean coal and gas. What is clear is that we cannot say that in 20 years’ time we will be building unabated coal-fired power stations and that we will meet our carbon budgets. It’s not credible.”

It is a view that Scottish Power and Iberdrola appear to accept. As Galán said earlier this year “Iberdrola is committed to developing the best technologies that will deliver low carbon generation in this country. Through our existing co-firing capability of biomass with potential advances in carbon capture and storage technologies, we are ready to provide the flexible generation needed to support the UK’s growth goals in renewable energy and at the same time ensure security of supply moving forward.”

If he gets his way, and if CCS does prove commercially viable, Longannet will brood over the Firth of Forth for some years to come. Some might say that is a big if. It will certainly be an expensive one.

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The forest of white windmills that make up Asia’s largest wind farm can be seen from miles away. Dotted across 2,000 square kilometres of hills and villages on a basalt plateau in western India sit more than 800 turbines - generating more than 1,000 megawatts of electricity.

The towering machines, which stand 80 metres tall, cast shadows across fields tilled by man and buffalo - a stark juxtaposition of ancient and modern India. For one man, however, the windmill farm in Dhule is a fitting riposte to the critics who derided his dream to build a global green energy business from a country plagued by crippling power cuts.

In little more than a decade, Tulsi Tanti has made Suzlon Energy into the world’s fifth-largest producer of wind turbines - selling them at a couple of million dollars apiece. Company turnover last year increased by 29% to $1.8bn (£1.2bn). About 90% of Suzlon’s order book is from markets outside India - largely the US, South America and China.

Despite the success, 2008 was an annus horribilis for the company. While Suzlon should have been reaping the benefits of a world hungry for clean energy, it has been hit by a triple whammy: the credit crunch sent its stock plummeting; cracks appeared in its rotor blades used by US customers, raising doubts over its technology, and the $1.6bn acquisition of Germany’s Repower, a turbine maker that produces giant offshore rigs, stalled.

The turbulence has hit the company hard. Suzlon’s stock price has crashed 90% since January to end up trading at just 56 rupees (80p) in December - valuing the Tanti family’s 66% stake at £830m.

Tanti brushes aside these episodes, seeing opportunities where others see crises. In an interview from his Mumbai office, the 51-year-old concedes his paper fortune has been blown away by the economic storm but says the forecast for the company remains good.

Wind power producers, he says, can’t keep pace with demand at a time when concern about global warming is driving governments to promote greener electricity. “Our final product is electricity and that is sold at a fixed price. Demand is growing at 5% a year globally and you need [wind power] to prevent climate change and for energy security. It’s the only industry that is going to grow,” he says.

Renewables

Tanti’s rationale is about demand and supply. He says that by 2020, the US, Europe, China and India will want to have 20% of their power supply from renewables. The issue is about making wind power “cost competitive” with carbon sources, especially coal, which fuels 65% of India’s electricity and costs at least a quarter less.

“Today wind power is just 1% of supply. It can grow to 7% by 2020. That is the maximum because industry has to find resources, material and execute projects. With greater volumes the price [of wind power] will drop … and [governments] will ask what is the cost for pollution from carbon fuels. You will need a carbon tax. “

More worrying perhaps were the questions raised about Suzlon’s key technologies. In June, Edison International, one of Suzlon’s biggest customers in the US, cancelled an order for 150 turbines after cracks appeared in the rotor blades. Many began to fret - and were only reassured when the Indian company shipped out new turbines made of reinforced plastic.

Tanti says these incidents are “nothing new” for an emerging technology and that retrofitting 400 turbines in the US was the first “stiffness problem” encountered in more than a dozen years of business. The cost is only $60m, he says, pointing out that competitors have put aside similar amounts in previous years.

Suzlon’s biggest acquisition has been a rollercoaster ride. The Indian company won a bidding war with French nuclear power group Areva with a $1.6bn offer for Repower, a maker of huge wind turbines.

However, the deal remains in limbo after Suzlon’s initial financing deal fell apart as markets crumbled. In late December, the company announced it would pay €270m (£260m) to increase its stake to 91%, the requirement under German law to control the company. Tanti expects to be in charge by early next year.

Repower is key to Suzlon’s global strategy. Tanti says that by 2020, there will be only five to six global players and to survive Suzlon needed to be big in the US, Europe and Asia. Tanti’s logic was that unlike in the US and Asia, where land is plentiful, in Europe he would need giant offshore wind turbines to produce electricity. Repower’s 5MW generator - double the power output of Suzlon’s biggest turbine - is 100m tall and has a rotor diameter of 126m. It can only be serviced using a helicopter.

Coupled with this technology and a cost base which is 19% lower than the European company, Tanti says he can grow Repower’s business five-fold in a short span.

“It will take three of four years to develop this technology and we need access to European offshore markets. We can reduce the company’s cost and increase their margins and unlock value here,” he says.

Few people would bet against Tanti. In 1994 he ran a textile business and bought two wind turbines to power his factories after becoming frustrated with India’s high-cost, erratic electricity supply. Tanti, a trained mechanical engineer, became fascinated by the economics and technology involved.

Gap in the market

In the 1990s, western firms had little interest in India and Tanti spotted a gap in the market. He decided to leave textiles and began installing and servicing wind turbines for fast-growing companies in India. By the late 1990s he had built up a large domestic business, partly through convincing state governments to adopt a friendly tax regime for green power.

It is here that Suzlon’s ascent starts, a story of a canny developing world entrepreneur who saw that India’s cheap but highly trained workforce could undercut rivals abroad. His next move was into manufacturing.

Tanti scoured the world for talent and innovations, buying up mainly European expertise. By 2000 he had set up a German research centre and bought AE-Rotor Techniek, a bankrupt Dutch company, to design rotor blades. With foreign money flowing into India, he floated Suzlon in 2005, raising $338m, and began expanding through acquisitions.

Key acquisition

A year later Suzlon bought Belgium’s Hansen Transmissions, a maker of turbine gearboxes, for $566m. Hansen was a key acquisition - Suzlon got its hands on a component that was in short supply. Tanti sold 28% of Hansen’s stock on the London Stock Exchange, gaining a valuation of more than five times its purchase price.

There’s no doubting Tanti’s global reach. The family joined forces with Arcapita, a Bahrain-based investment bank, to buy China’s Honiton Energy in 2006.

He aims to build Asia’s largest wind farm, exceeding his Indian one in size, in Inner Mongolia that will generate 1,650MW of wind power.

The Chinese investment will total more than $2bn.

“China has the will to do this. The Chinese government has said it wants 100,000MW to come from wind. The country has a large potential of 250,000MW. That is why we have our manufacturing there. We are a Chinese local company too.”

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Britain’s wind power industry is facing a double blow of lengthy planning delays and rapidly rising construction costs in a crisis that threatens to sink the government’s climate-change goals.

Dozens of projects are being held up by planning inquiries, with the average length of time taken to win permission being 15 to 20 months in England and far longer in Scotland and Northern Ireland, where the bulk of the schemes are being developed.

There are 262 different projects representing seven gigawatts stuck in the planning stages. And the rate of approvals is slowing despite government promises, according to the British Wind Energy Association (BWEA).

It said that the start of a third inquiry into one project in Norfolk that has already been delayed for seven years showed that the government has not cured the problem despite introducing the Planning Act to speed up the process.

Meanwhile Centrica, owner of British Gas and one of the most powerful energy utilities, said a 250-megawatt scheme off the Lincolnshire coast was hanging in the balance because turbine manufacturers and other suppliers had raised their prices so high they were jeopardising the economics of the scheme.

With Britain committed to producing 15% of its energy from renewable sources by 2020 to meet European Union targets, the government would be blown off course unless it intervened more robustly, said the BWEA.

“The government does not want the political problems of undermining local democracy by taking control out of the hands of local councillors,” said Charles Anglin, director of communications at the BWEA. “But if it fails to act it is just storing up more difficult problems further down the road when it gives the go-ahead to coal or expensive gas projects instead.”

To meet the 15% target, the BWEA estimates that Britain needs more than 30GW of wind capacity. “We think you can get 20GW offshore, which means you need 10-12GW onshore, and yet so far we have only got 2.5GW,” Anglin said.

“We are aware that the planning system does need to be quicker and there are other barriers to projects,” said a department of energy and climate change spokesman. “That is why we are going to unveil a renewable energy strategy with the next steps to meeting our goals.”

The planning problem is highlighted by the battle waged by Ecotricity at Shipdham in Norfolk over a wind farm application submitted in December 2001. The company has won two planning inquiries only to find the final decision challenged in the high court by two local residents claiming potential noise problems.

The Planning Act applies only to schemes in England - and then only those over 50MW. “Eighty to 90% of the schemes in England are under 50MW anyway so the Planning Act does virtually nothing,” Anglin said.

Offshore operators are also struggling because of the mounting costs that have already chased Shell and BP off to the US.

The cost of Centrica’s 250MW Lincs wind farm off Skegness has increased from £2bn to £3bn a GW. “We are committed to building wind farms,” said a company spokesman, “but we have got to get the costs down to an economic level.”

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Editorial: Politicians hope green revolution can rescue jobs and economy, as well as the planet

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