Renewables sector emerges bloody but unbowed from Europe’s recession

As Europe at last seems to be stepping out of its long recession, the renewables sector is emerging stronger, despite its reliance on government subsidies. Even in crisis-hit Greece, it was a renewable energy company that provided the Athens Stock Exchange with its first IPO since the debt crisis began in 2009.

Eltech Anemos, a unit of Greece’s biggest construction group Ellaktor, sold all the 20.67 million shares it was offering, albeit at a low price of around EUR1.70 – netting the company EUR35.1 million.

Chief Operating Officer Theodor Sietis said they were satisfied because they “managed to complete the capital increase in adverse conditions.” Eltech Anemos operates 12 wind parks, a solar plant and a hydroelectric plant with 170 megawatts in total installed capacity and aims to use the money raised to finance part of a EUR118 million euro investment plan for new wind parks.

In the UK, renewable electricity generation (supported by the renewals obligation and feed-in tariff) has grown steadily, increasing on average by 20.3% year-on-year between 2009 and 2013, according to the Renewable Energy Association’s (REA) 2014 report. There was however a noticeable drop in employment in the sector, something that REA believes will be overcome in the next three years as growth in anaerobic digestion and small scale renewable heating boosts numbers to between 109,900 to 123,600 employees.

Paul Thompson, REA policy head told Utility Week that “the renewables industry proved particularly resilient to the economic downturn, and achieved continual growth, with current stats showing renewables supplying 4.2% of UK energy.” However, he said, there is still much to be done, especially on renewable heating and transport fuels.

Different arms of the renewables sector have had different experiences. The European Photovoltaic Industry Association’s (EPIA) chief executive James Watson told Utility Week that uncertainty caused by the recession “has been compounded by unstable conditions and retrospective measures adopted in a number of European countries in the last few years, which have undermined investment certainty around renewables in general”. But he added: “PV has continued to grow in Europe, showing its great potential and its central role in the ongoing energy transition. Its share has risen from 0.3% of Europe’s electricity production in 2008, to as much as 3% by the end of 2013, only five years later. In terms of net power generation capacities added since 2000 in the EU, photovoltaics clearly leads the way together with wind and gas.”

The situation has been similar for the solar thermal market in Europe which “was hit hard by the 2008 financial crisis and the subsequent economic recession” as Pedro Dias, Secretary General of the European Solar Thermal Industry Federation (ESTIF) told Utility Week.

“The European solar thermal market has contracted by one third since the peak year of 2008 and subsequently it has undergone a decrease of 8.7% per annum on average. However, it remains above the size reached in 2007, but only by a mere 6%, and over the past ten years the market has doubled, corresponding to an average annual growth of 7.6%, said Dias.

“For a stronger deployment of the technology and to meet these challenges, the market needs adequate legislative and regulatory framework, stable and effective support schemes, technological development and better communication, to raise the industry profile among consumers and decision makers,” he explained.

Gordon Edge, RenewableUK policy director told Utility Week that the UK wind sector has been a bright spot however: “The UK is reaping the benefit of a decade of support through the renewables obligation, which has driven a lot of development activity, and the clear commitment of the UK Government to evidence-based policy making and grandfathering” said Edge.

REA’s Thompson says that lots remain to be done. The British government, he said, must “maintain a supportive regulatory framework for the UK to achieve its green energy potential. Stable policy helps unlock investment, which in turn creates jobs and leads to and cost reductions across the industry.”

According to RenewableUK’s Edge, there is a period of uncertainty ahead, especially with the 2015 UK elections in mind and the introduction of Contracts for Difference. “We are hopeful that 2020 objectives can be met, not least as there is ample capacity in the project pipeline, but the UK government needs to demonstrate its support through adequate release of budget to the CfD allocation process,” he told Utility Week.

As for silver linings, the ESTIF’s Pedro Dias said some solar market segments are growing in sales and visibility such as in the case of large systems “as solar district heating continues to grow in Denmark and industrial process heat is getting into more demonstration projects.”

EPIA’s James Watson said the forecast for the coming years remains positive. “The photovoltaic market in Europe should stabilise at a solid level of around 10GW a year over the period 2014-2018, bringing the European cumulative installed capacity to between 119 and 156GW in 2018, starting from 81.5GW at the end of last year. As PV is becoming a major part of the electricity system all over the globe, electricity grids and markets urgently need to be adapted to these new realities and facilitate a cost-efficient energy transition,” said Watson.