Posted on: 10/05/2017
Growth in independent renewable projects has flatlined after years of dynamic growth in the wake of deep and sudden subsidy cuts, according to SmartestEnergy’s fifth annual Energy Entrepreneurs Report.
Energy entrepreneurs outside the traditional electricity supply sector are now turning to the emerging storage market and are driving rapid expansion which could see commercial UK battery capacity increase as much as a hundred times by 2020.
Independent generators have invested £2.75 billion in over 6,400 solar parks, wind farms and other renewable projects, with a combined capacity of 12.75GW. Last year they supplied 8.6% of UK demand, enough to power 7.8 million homes – a quarter of all households.
Nearly two thirds of independent renewable generation, 8GW, has been built in the last four years at a cost of £1.5 billion. On average, 275 independent projects have completed each quarter since 2013, but that fell to 38 from October to December 2016 and just 21 in January to March 2017.
Government must allow renewables and storage to compete on level playing field
The report found that in a challenging market for renewables, energy entrepreneurs are now turning their attention to storage. Independent developers have won four fifths of battery contracts in Capacity Market auctions, which ensure there is enough electricity to meet peak winter demand. They secured 407MW while just 105MW went to projects from “Big 6” utilities, and the majority was secured by independents with renewable projects. Independents have also won more than half the battery contracts to provide Enhanced Frequency Response to stabilise the grid, 110MW out of 201MW.
Just 20MW of commercial batteries were operating in 2016, but 31 projects have now won long-term contracts in the capacity and EFR markets to provide 578MW of capacity in 2020. In all, 153 projects with a combined capacity of 2.3GW have announced plans for deployment over the next four years, which would see UK battery capacity increase by more than 100 times.
Iain Robertson, Vice President, Renewables at SmartestEnergy, said: “Energy entrepreneurs have demonstrated that they can build clean, renewable generation at scale, quickly and cost-effectively. To put their achievements in context, Hinkley Point C, which will power 6 million homes, is expected to cost £18 billion and take 10 years to build.
“But political support and a stable policy environment are vital, and the renewables industry has been rocked by subsidy cuts that were too sudden and too steep. Around two-thirds of existing power stations are due to reach the end of their lives by 2030, and the UK needs solutions which will keep the lights on and cut carbon while keeping electricity affordable.
“Energy entrepreneurs are at the forefront as we transition to a new energy system. Independent developers still have renewable project pipelines and are looking at innovative ways to build without subsidy. They are now also driving forward the battery revolution.
“We call on the government to recognise the role renewables and storage can play in its forthcoming industrial strategy, and to allow them to compete with traditional generation on a level playing field.”