21 Feb RenewableUK report outlines UK clean energy requirements
Over a year has passed since the UK stood at COP26 as the ambassador for investors in green technologies, especially offshore wind, tidal and green hydrogen systems. International representatives explored innovation hubs such as the Siemens Gamesa factory and the Offshore Renewable Energy Catapult centre. Noone foresaw how much our world would transform in the last year. The Russian invasion of Ukraine sparked a global gas crisis and triggered Europe to accelerate its transition towards an alternative and cleaner energy system. As countries across Europe turned their attention toward renewable energy, the US administration created its strategy, focusing predominantly on developing a clean energy manufacturing hub. In response to the US Inflation Reduction Act, the EU began establishing its own Green Deal Industrial Plan, fast-tracking permits for clean technology and supporting added investments. Meanwhile, global leaders like China continue to develop more capacity for renewables, spurring competitive new technologies within the global energy market. Intensified competition in renewables highlights the importance of the industry toward economic development and productivity and how critical it is for the UK to take the necessary steps to retain its competitive edge. Renewable energy now provides the lowest cost to generate new electricity and will likely remain this way. Renewable energy can provide countries with lower energy bills, green jobs, economic prosperity and energy security while tackling the climate challenge we all face. There is a growing demand for new facilities worldwide, and therefore there is a significant opportunity to deliver the most appropriate conditions for manufacturing investment. So what can the UK do to retain leadership in renewables during the rising competition for investment, skills and supply chains and maximise the economic benefits?
RenewableUK recently published a report, “Retaining the UK’s leadership in renewables – recalibrating policy amid an energy crisis and increasing global competition”, highlighting key steps the UK must take to prevent being overtaken by clean energy projects. The report suggests that the US and EU are accelerating with positive policy and regulatory conditions for potential investors.
In response, the UK must provide financial incentives for developers and supply chain businesses, like new capital allowances for the cleantech industry. RenewableUK believes the suggested measures would allow the country to maintain private investment interest in onshore and offshore wind and encourage the commercialisation of new technologies like floating wind, tidal and green hydrogen. For example, the US package includes tax credits to supply chain businesses to develop parts for wind farms, which are worth in the region of $120 million for every new gigawatt of capacity. At a time when the UK focuses on manufacturing opportunities in its supply chain, the country must focus on barriers to retain supply chain investment and generate high-quality jobs. According to the CBI, the average wage in the green sector is £42,600, compared to a national average of £33,400.
The report also states that the Government must create an overall budget and sustainable prices for renewable electricity in this year’s auction for clean energy, accounting for inflation which has considerably increased raw material and labour costs. Without this plan, there is the risk that the UK will secure private investment for a limited number of wind and solar projects in this year’s auction rather than maximising the ability to secure new clean energy capacity and expand domestic supply chains.
Other recommendations include accelerating the planning process as it can take five years to gain approval for developing an offshore wind farm after plans are submitted. The report also states that onshore wind farms can be built in about a year, but the planning framework still effectively bans the development of any new projects. Accelerating investment in new grid capacity is also critical, as some offshore wind developers are waiting as much as ten years to secure grid connections.
Ana Musat, the executive director of policy at RenewableUK, explains that they are urging the Government to look at the recommendations in their report before the Spring Budget, as the renewable energy industry is facing a challenging year, with inflation impacting profit margins and rising international competition for investment, skills and supply chains. Musat believes the US and the EU are in a race to create investors to clean energy investors, and the UK cannot take its leading position for granted. Musat explains that a mix of economic measures and smart regulation will generate an environment capable of enhancing energy security, reducing customer bills and tackling climate change at scale, enabling us to achieve our net zero goals.
Conservative MP Martin Vickers explains that the UK has the talent and experience to be a global leader in renewables, especially wind power. Vickers welcomes the RenewableUK report showing how the Government can make the UK more attractive for renewable energy investment. By following the recommendations, the UK can enhance local economies nationwide, creating thousands of new jobs and securing cheaper household energy bills.
No Comments