In this post-Brexit world, the seeds are sown. But will we reap a whirlwind or will the Remainers find they’re winding themselves up into an unnecessary tiz?
Naturally having been launched into the great unknown – a world where a contingency plan for the post-Brexit was not even conceived – a lot is up in the air, and that isn’t a situation that anyone likes. BVG Associates’ Director Bruce Valpy warns that the likelihood of negotiations over the exit package lasting for at least two years will have profound consequences: “That uncertainty in itself has real implications for renewable projects in the UK. Investors generally dislike uncertainty and the price demanded for increased risk is increased returns.”
Wind energy firms have had a mixed reaction. Dong, Siemens and Vattenfall all called for clarity just days after the result was announced. The Danish developer Dong said on June 24th, “We don’t believe that UK energy policy is dependent on EU membership and we are confident that Dong energy will continue to make an important contribution to provide UK homes with low carbon electricity supply in future. Like many other businesses we will await clarity over the implications of the vote to leave the EU.”
Had the Government been able to make a comforting statement that its energy policy was going to be unchanged, that Brexit would not mean the unravelling of carbon-free targets, things might have been left in a much happier state for this sector a least.
It was not to be.
Siemens, who had on the 24th reaffirmed its commitment to the UK, also clearly called for clarity: “The government must now move swiftly to unify and agree the nature of the UK’s relationship with the EU and other trading partners, creating clear roadmaps to encourage future investment.” This is a company which after all has plans for a new offshore wind facility at Hull which is expected to begin assembly of wind turbines and production of wind turbine blades sometime next year.
The plea fell on deaf ears and led to a second statement just ten days later, with a much less confident tone. Siemens CEO Juergen Maier announced that the company was freezing its UK wind power operations and planned to keep it that way until the future trading arrangements were clarified: “We are 100 per cent committed to our investment in Hull and the 1,000 new jobs.. However, if we and very importantly a much wider offshore industry located in the Humber, want to export in the longer term, we need to understand what the arrangements, such as for export and EU funded R&D, are between the UK and the EU.” He called on the government to immediately begin talks with the wind sector before triggering Article 50.
Some hope was found in a decision by the Scottish Government to enter into a £7.9m collaboration with a number of Europe’s largest offshore wind developers – including Dong and Vattenfall. The partnership went some way to assuage fears about the future of renewable investment in the UK. While the UK is not part of the 9 country MoU on Offshore Wind Agreement, the Scottish Government has been more welcoming. The Minister for Business, Innovation and Energy Paul Wheelhouse said, “Previous Scottish Government support for the OWA has helped develop new ideas in key areas of importance to companies operating in Scottish waters and I have no doubt this new funding will help firms to continue this important work. Only last month, around 350 jobs were announced as a direct result of the construction of the Beatrice Offshore Windfarm, highlighting the massive opportunity offshore wind presents to Scotland and the Scottish economy.”
Yet one swallow a summer does not make. Vattenfall, which is involved in onshore and offshore wind in the UK, warned Brexit was a problem: “We still want to grow in the UK, particularly in wind power, but clearly a significant change like an exit from the EU introduces more risk to the sector for an unforeseen period of time. We aim to understand and assess that risk on an ongoing basis as we would with any policy or treaty change.”
Dong remains the most confident player in the sector in the UK, recently arguing that our energy needs can be met without resorting to new nuclear power. The company’s chief executive Henrik Poulsen was quoted as saying, “Could you build a national energy policy without nuclear? Yes you could … and if you needed to fill a (energy capacity) gap offshore, wind could be accelerated to fill such a gap.” He told The Guardian that the Brexit vote had not impacted on its £5.1bn UK investment programme. “We hope offshore wind will remain a key component in the future energy system and are optimistic about prospects under the new government.”
That belief in the ability of offshore to enter new space is echoed by Valpy who has called for calm: “Overall, we don’t see any need for knee-jerk responses. I am confident that our industry can rise to the challenges the decision presents and maybe find some new ways to benefit. Our can-do attitude will see us through.”
It’s an ill wind that brings no good. Let’s hope he’s not disappointed.