Resources / article / Investment in Renewables – Two Steps Forward, One Step Back?

Investment in Renewables – Two Steps Forward, One Step Back?

In a world that is ever more falling short of its obligations to cut carbon output, to drive forward clean energy initiatives, more needs to be done by Institutions and businesses alike to achieve the targets that have been set by the Climate Change Act (1998) to attain the 80% reduction by 2050.

CV not to hand? No problem, send us an email or give our hydrographic expert Peter Thompson a call on +44 (0) 203 325 0630.

It would be easy to mock the situation facing the renewable sector currently, with David Cameron being accused of issuing a ‘death sentence’ to the industry through the policy changes he has made since assuming total control over British government, but right now making light of this just doesn’t feel right.

With only two months before thousands of international delegates descend on Paris for COP21, the UK has dropped out of the top ten of a global league table on renewable energy. In its quarterly report EY (formerly Ernst and Young) described the eradication of support for renewables as “death by a thousand cuts.” The company’s energy corporate finance leader Ben Warren told The Guardian that it was “not very normal” for a country to drop by three places (to number 11) in a single quarter.

The EY table was established 12 years ago to rate 40 countries on the attractiveness of their renewable energy investment and deployment opportunities based on a number of macro, energy market and technology specific indicators.

The US is back in the top spot, with the report’s authors saying President Obama’s Clean Power Plan “not only (shook) up the US energy market but also our index…as it rolls out arguably its most comprehensive and far-reaching emissions reduction legislation to date with the potential to significantly increase renewable energy deployment over the next 15 years.”

Perhaps surprisingly, China was pushed back into second spot by the CPP in terms of new renewables investment and deployment but it’s noted that the “economic slowdown, limited foreign participation despite government efforts and grid constraints contribute” to this.

While we’ve been impressed with Germany’s record breaking renewable energy production in the last few weeks India surpassed it and takes the third spot. The multi-billion dollar investments promoted high praise indeed, with EY saying it had “galvanised the market and prompted economic and political reform that is creating the foundations of an extremely attractive long-term market.”

With the UK dropping out of the top ten the renewable sector says investors won’t know what is going on. The impact is clearly being felt already according to the trade body Scottish Renewables. Investment in wind farms in Scotland stalled after it was announced that new projects in this sector would be excluded from a subsidy scheme from April 2016. Senior policy manager Michael Riley said, “With the decision to end support a year earlier than planned, around two gigawatts of onshore wind projects in Scotland have been put at risk. These are projects that could bring around £3 billion pounds of investment and provide enough generation to meet the equivalent electricity demand of 1.2 million Scottish homes.”

A government spokesperson for the Department of Energy and Climate Change defended its actions arguing that it had “driven down the cost of renewable energy significantly” and had allowed for “parts of the renewables industry to survive without subsidy.”

So far this year there have been 23 large-scale projects cancelled, and since the report was published the government’s turned down plans for a £3.5bn offshore wind farm near Bournemouth. Industry insiders believe the government’s course of action will derail the market momentum needed to bring onshore wind and rooftop solar energy to that critical point where they become “cost-competitive and subsidy-free” (estimated to be within five years).

In the last week Ikea, Panasonic and DuPont all added their names to a list of businesses calling on the government to rethink their “extreme” and “damaging” proposals to cut the Feed-in-Tariff scheme. Leonie Green from the Solar Trade Association said, “The truth is we cannot afford not to. It’s hard to think of a greater waste of public money than building up a strong British solar industry, hailed by the Prime Minister as a success, and then pushing it over a cliff before it is ready to fly.”

Whether those warnings have an impact is anyone’s guess, but ironically what might save the industry is if, as EY warns, the uncertainty begins to hit investment on the government’s pet projects. Warren said, “This trend of inconsistent policy tinkering could also sour investor confidence in other areas, such as new nuclear, carbon capture and storage (CCS) and shale gas, as well as offshore wind.” If that happens, then it wouldn’t be at all surprising to see solar panels installed on number ten.