Since the UK Government’s decision to abandon its resistance to subsidising new onshore windfarms, investors in renewable energy have become more interested in the market. Lifting the block on financial support for onshore wind and solar projects and the return of the Contracts for Difference auctions has made the UK more attractive for renewable energy investment over the past 6 months. It has in fact been named as one of the most attractive places in the world for investment in renewable energy.
According to a report from the world-famous audit giant, EY (Ernst & Young) Britain has risen in the rankings of a biannual global survey of investors for renewable energy to take the sixth spot in the “attractiveness index” moving ahead of India.
Data from the 55th edition of EY’s Renewable Energy Country Attractiveness Index (RECAI) comes ahead of a major clean energy auction next year in 2021. The return of the CfD auctions for Pot One technologies such as onshore wind and solar was enthusiastically welcomed by the renewable energy sector who have been calling for their return for years.
In previous years, Pot One technologies were only included in the first round of auctions. Currently, potential changes to the CfD scheme are being looked at in a formal consultation which has been extended due to Covid-19.
Next year’s auction will allow new renewables projects to be up and running from the mid-2020s if they manage to secure a contract that guarantees a price for the clean electricity they generate.
The EY report’s author Ben Warren expects the impact felt by the Covid-19 pandemic to only last in the short term saying that despite the challenges caused by the Coronavirus pandemic that renewable energy remains resilient.
He recognised that there are many positive trends in the renewable energy markets around the world, which includes growth in utility scale storage and an increase in environmental concern among investors meaning that markets should be in a good position to continue growing once COVID-19 is over.
“None of this is to diminish the profound challenges caused by a pandemic, the like of which none of us has experienced before. But it is important to recognise the central role that clean, low-carbon energy generation will play in the global economy of the future.”
EY believes that it was the government’s decision to include onshore wind and solar energy projects in the auction that helped the UK to climb one rung on the rankings list, to just below Germany, Australia, France, China, and the US.
For the first time since 2016 the US topped the rankings even though the federal government continues to support fossil fuels. The top ranking was in the most part due to plans to invest $57bn (£47bn) to install up to 30GW of offshore wind by 2030.
China no longer takes the top spot in the rankings as Beijing begins to look at removing subsidies from the market and the Coronavirus pandemic reduces China’s voracious need for energy.
Ben Warren said:
“Certainly, renewable energy is not immune to the economic disruption being wrought. But many of these effects are likely to be short-term. Already, manufacturers in China and Europe are restarting production. Utilities have worked hard to keep generation going in difficult circumstances. And power demand will rebound as economies get back to work.”
He went on to say that investors were still confident in “the long-term picture for clean energy.”
“The need, after the pandemic, to ensure greater economic and social resilience will work in favour of distributed power sources, such as wind and solar, and the applications offered by battery storage.”
The lifting of the block against onshore wind projects in the UK earlier this year will allow schemes to compete for subsidies alongside solar power developments and floating offshore wind projects.
The decision to do this followed a government pledge to cut emissions to almost zero by 2050, an achievement which official climate advisers think will depend upon a tripling of the UK’s onshore wind-power capacity in the next 15 years.
Regardless of the unpredictability created by Covid-19 many renewable energy developers are working towards the 2021 auction in order to assist in promoting a green economic recovery once lockdown measures are lifted.
Luke Clark of RenewableUK, said EY’s report is right to focus on the potential economic opportunity that renewables can offer after the pandemic.
“Our sector’s plans to invest tens of billions of pounds in vital new energy infrastructure all over the country have not changed, and the government is supporting our work as it remains committed to reaching its legally-binding target of net zero emissions. The UK’s low-carbon economy will stimulate new growth, boost productivity and support tens of thousands of jobs as we work on projects at home and secure new export opportunities around the world.”
Analysts, economists, and environmentalists present a convincing case for the renewable energy industry to play a greater role, in helping the UK to emerge from the financial maelstrom created by the virus and powering a green economic recovery.
There is great potential for renewable energy companies that generate energy from the sun, wind, and sea to attract billions in investment and create thousands of green jobs across the UK’s regions at the same time as advancing Britain’s climate ambitions.