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Positive signs for the renewable energy industry

April 15th, 2014 | 3:43 pm

The renewables industry has gained positive momentum over the last month. Significant industry investments, the release of DECC’s solar strategy, and increased levels of installed capacity are all giving investors an increased level of confidence.

Investment has been seen at both large and medium scales over the past month. Announcements of two major investments in UK wind turbine manufacturing facilities from Siemens and Endurance Wind Power (who opened a new factory in March) coupled with the announcement from the Green Investment Bank of a £460 million investment into two large offshore wind farms, has shown that investors are becoming increasingly comfortable with the long term future of the renewables industry in the UK.

The launch of the UK Government’s Solar Strategy in early April was also a welcomed move. The strategy signals a positive commitment by the government to the solar sector; calling for increased deployment, further innovations in technology and installation techniques to reduce costs. Particularly encouraging is the government’s push towards promoting PV deployment on domestic, commercial and industrial roof tops, helping drive the growth of the PV sector more widely.

In addition to new strategy and significant investments, the industry has also seen a discernible increase in installation figures for renewable energy, as statistics for 2013 showed last month. Over the last year, UK wide installation levels rose by approximately 15% with Scotland obtaining almost half of its energy from renewable sources.

Despite these good news stories, there are signals of concern within the industry. In the past month a number of large scale biomass projects were pulled as developers lost key project partners and sited inconsistent government policy. Dedicated biomass electricity plants have suffered from an about turn in policy in recent years, with the introduction of a 400MW cap on new plants. Additionally, recent budget changes preventing Venture Capital Trusts and Enterprise Investment Schemes from accessing ROC and RHI markets may have created a short fall in financing for larger scale community owned schemes, however the sector is lobbying hard for an exclusion (currently in place for the FiT). Whilst on the horizon changes in EU state aid rules could also see FIT scale projects above 1MW enter the competitive bidding process, via Contracts for Difference after 2017. This change in process could place smaller generators at a disadvantage, exposed to disproportionately higher levels of uncertainty.

The last month has certainly been encouraging for the sector but as recent examples have also shown, without stable policy and support mechanisms, the sector can become quickly unsettled.

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