Have renewables got wind in their sails or are they heading for the compost heap?

In good news for the UK renewables market, Shell has announced it has signed a five-year solar power purchase agreement with British firm British Solar Renewables. This further buoys recent news that last year was the “greenest ever” for Britain’s power sector.

But elsewhere, national investment in clean energy plunged further in Britain than in any other country last year because of government policy changes – begging the question, is the renewables sector on the up or will future growth be stifled?

Catching a headwind

• Oil giant Shell, in the form of Shell Energy Europe Ltd, has signed a five-year power purchase agreement with British Solar Renewables Ltd (BSR).
• 2017 was the greenest ever for Britain’s power sector according to environmental campaign group WWF, after data released by National Grid revealed 13 different renewable energy records had been broken.
• Renewable energy will be cheaper than fossil fuels in two years, according to a new report from the International Renewable Energy Agency (IREA), which credits continuous technological improvements in the sector.
• The Renewable Energy Association (REA) said it welcomes the Government’s response to the consultation on limiting support for biomass conversion under the Renewables Obligation scheme, describing it as “an acceptable compromise”.

Heading for the compost heap

• Analysis by Bloomberg New Energy Finance (BNEF) shows investment in green energy fell 56 per cent in the UK last year – the biggest fall of any country – after what Innogy SE described as “stop-start” support from government.
• The 56 per cent plunge in investment marks the second successive year that financing for renewables has fallen in the UK.
• The recent subsidy ban for new onshore wind farms could add £1bn onto energy bills over five years, according to the Energy and Climate Change Intelligence Unit (ECIU). But Keegan Kruger, wind analyst at BNEF said he expects the trend in UK investment to continue downwards until around 2020, when it he thinks it will likely stabilise thanks to new investments in offshore windfarms.
• The last Budget ruled out any fresh support for renewables before 2025 at the earliest – despite investors’ pleas that they need a long-term policy framework in order to act.

What the experts say…

Benedict McAleenan, head of biomass UK at the REA: “The decision not to undermine existing biomass assets is a positive one and, while the response will limit the sector’s growth, it is seen as an acceptable compromise. The decision was taken in order to limit spending ahead of the 2025 coal phase-out deadline.”

Paul Cowling, director of wind energy offshore at Innogy SE: “[Government approach] is just very lumpy. You have this very sort of cyclic type of approach that government have had in the past.”

Graham Harding, MD and CFO of British Solar Renewables (BSR), which has just signed a five-year solar power purchase agreement with Shell: “The UK renewables sector has been on an upward trajectory for a number of years… In their Clean Growth Strategy the government is looking to work with people and organisations to ensure the UK maintains its position as a clean growth world leader. There is therefore a commitment from government but an onus on private investment, rather than direct subsidy.

“Whilst levels of renewables activity and investment have fallen recently, there are many good reasons to believe that those levels will increase again in the future. The speed and amount of such investment will inevitably be driven by investment models and internal rate of return. These, in turn, are driven by deployment costs (which are likely to continue to fall), innovation in technology (including the provision of energy storage) and future movements in energy markets.”

Giles Dickson, CEO of WindEurope: “The wind industry is at risk from growing international competition and declining policy ambition on renewables in Europe. Job growth in the industry has stalled in the last five years as many countries have become less ambitious on renewables.”

Adnan Amin, director-general of the IREA: “Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one.”

Caroline Lucas, the co-leader of the Green Party, said: “Behind the Government’s green veneer we see continued failure on green energy. Under the Prime Minister’s watch, investment in clean technology has slumped, because of government policy changes. Make no mistake, these new statistics [from BNEF] are damning.”

A spokesperson from the Department for Business, Energy and Industrial Strategy (BEIS) said: “The UK has reduced emissions on a per person basis faster than any other G7 nation, and the government is committed to a low carbon future for the UK with clean growth at the heart of our industrial strategy.”