CEO blog: A perfect storm for the independent generation sector

Our latest Energy Entrepreneurs Report shows strong growth for the independent generation sector against a backdrop of falling wholesale prices and policy uncertainty. Chief Executive Officer, Robert Groves looks at the perfect storm of challenges for the sector.

Independent generators are playing an ever more important role in building our renewable future, having more than doubled independent renewable capacity from 4.7GW (2012) to nearly 11GW last year – nearly 40% of all renewable capacity in the UK. Energy entrepreneurs now supply 7.6% of UK electricity demand.

However, the sector is facing a perfect storm of challenges with:

  • wholesale electricity prices dropping 20% last year
  • the pre-mature end of the Renewable Obligation (RO) for onshore and solar projects
  • greatly reduced scope and scale for Feed-in Tariff (FiT)
  • many unanswered questions over Contracts for Difference (CFD)

Piecemeal reform has created much uncertainty over future energy policy and investors are demanding higher returns from renewable projects in the UK than other EU markets.

Ironically, this is happening when demand for renewables is growing. The UK has committed to source 15% of all energy from renewables by 2020 and has a target of generating 30% of electricity from renewables – further decarbonisation of our electricity industry will be essential.

Energy entrepreneurs are leading the transition to a low-carbon energy system, but to overcome these challenges and achieve our climate change targets the government needs to work with generators.

The sector needs the right frameworks in place to support continued investment in building renewable capacity and to restore investor confidence, it needs a level of certainty over future support available for the industry.

Download our Energy Entrepreneurs Report to read more.