Posted on: 15/09/2015
Our latest survey has highlighted how confidence in the independent renewable generation sector has been knocked by recent government announcements. Iain Robertson explains why the resilience shown by the sector in recent years provides some hope for the future.
More than half those involved in the independent generation sector have cancelled or postponed renewable energy projects on the back of recent policy changes, according to our recent Energy Entrepreneurs Investor Confidence Survey.
The survey, which followed the release of our Energy Entrepreneurs 2015 report into the independent generation sector, showed the extent to which the changes to subsidies announced by the new government has inevitably dented confidence.
Over 75% of the 70+ respondents, which included a mix of industry stakeholders working across multiple technologies, indicated that they are now only “moderately confident” or “not confident at all” about the renewables industry following recent developments. This lack of confidence was also reflected in a survey of lenders released this week by Scottish Renewables and EY. Some funders have put a complete halt on renewables lending until the UK Energy Bill receives Royal Assent, not expected until next year.
There is still much uncertainty around the full detail and impact of the changes around the Renewables Obligation, Feed-in Tariff and removal of CCL exemption. But it’s clear the changes amount to a significant moving of the goalposts and it is perhaps not surprising that with the ink yet to dry on some measures and others still to be announced, almost everyone who works in the sector is feeling nervous about the future.
While the economics and viability of some projects will inevitably change, many energy entrepreneurs are already focusing on how to develop ones which do still stack up. As one respondent to our survey put it, while things are still uncertain right now “viable new business models will emerge”.
The nature of the independent generation sector means those behind the thousands of projects already in operation have had to overcome many hurdles to secure planning permission, grid connections and funding.
The sector has also been through major changes to subsidy mechanisms in the past as well as having to contend with the impact of the credit crunch on availability of finance. More recently, the fall seen in wholesale energy prices has also hit independent generators.
Despite all those challenges, this year’s Energy Entrepreneurs report highlighted the resilience of the sector to date. Project numbers soared by 57% last year, taking the total invested outside of the major power utilities to almost £2.1bn with 4,460 commercial-scale sites of at least 50kW capacity now in operation.
It will be interesting to see just how the latest policy changes impact on the figures in next year’s report and, in particular, the year after. But the progress we have seen in the sector to date provides confidence that over time it may be able to adapt to the new landscape and continue to make a growing contribution to meeting the country’s energy needs.
Download the Energy Entrepreneurs Investor Confidence Survey results
Download Energy Entrepreneurs Report 2015