The Wind Energy Industry in the UK

The latest State of the Industry report from trade body RenewableUK has shown the UK wind energy industry to be facing an uncertain future with those involved confused and concerned about the months to come.

However it also has shown up some contradictions with for example 29% of businesses questioned for the report expecting the hire new employees within the next 18 months and 31% expecting to have to make redundancies.

Likewise, 35% of the industry said they expect to company growth to exceed 10% in the coming year as they expect to secure the final Renewable Obligation subsidy prior to it closing in April 2016. In contrast 70% of companies stated that the investment climate was less positive than it had been in the previous 18 months mainly due to the reduction and removal of government support.

Since securing a majority in the May general election the UK Conservative Party brought in a number of policy changes to renewable energy subsidies including ending the Renewable Obligation for onshore wind a year earlier than planned in April 2016 and so far have failed to announce replacements despite promising to boost investor confidence.

The RenewableUK report also stated that regardless of the uncertainty surrounding the industry 2014 / 15 was still a good year for wind energy developments with 13GW of new capacity installed and a further 2.1GW currently in construction of which 98% is onshore.

The report, released last week, stated that £1.25billion was invested in the UK wind industry over the same period which resulted in a £402m of turnover for the onshore industry and £840m for offshore.

Also it was revealed that a record high 1.8GW of onshore capacity was consented in 2014 with 75% of that to be found in Scotland. However despite these expansions those asked still claimed the industry faces an uncertain future. For example only 30% of those asked said they expected investment to increase over the next 18 months compared to 60% in 2013. 42% stated that they expect investment to fall over the same period compared to 13% in 2013.

The report also confirmed that over 30,000 people in the UK rely on the wind energy industry for their livelihoods with roughly half of these employed directly within the industry but the impact of the government’s policy changes on employment is also currently unclear.

At present the sector still expects to take on new staff but at a much lower level of growth than before, from 70% in 2012 down to 39% this year. Also companies are much less optimistic regarding meeting the country’s renewable energy targets with only 3% of those asked believing we will reach the target of 13GW – 15GW by 2020 a drop of 16% from last year.

The report highlights the importance of stable long term policy for investors in the sector. Recently the UK government has been criticised for failing to deliver a strong policy by a range of high profile figures including John Cridland CBI Director – General, Lord Deben chairman of the Committee on Climate Change and former US Vice President and high profile green campaigner Al Gore. Only last month EY reported that the UK has fallen out of the top 10 of the global Renewable Energy Attractiveness index for investors for the first time.

In more positive news Scotland has exceeded its target of 500MW of community owned renewable energy capacity as the total has now reached 508MW. Energy Minister Fergus Ewing made the announcement at the Holyrood Magazine Community Energy Conference in Perth last week.

The Scottish Government recently published a Community Energy Policy Statement which charts the economic and social benefits of shared energy ownership.

Speaking at the announcement Mr. Ewing said: “Community energy represents tremendous potential to empower people to make the most of their own local resources. By creating a system that focuses on local energy, we can help to tackle some of our most pressing issues – from security of supply, to increasing energy costs – and stimulate local economic renewal.

“I am delighted we have met this target early which creates a huge opportunity to increase our ambition and to keep Scotland in the lead. We will be considering the scope to review our target alongside other energy policy development over the coming months.

“There are still challenges we need to overcome – community energy generally has higher capital costs, longer lead in times and frequent delays in connecting to the grid, while the UK Government is intent on slashing support for small scale renewables.

“The first national Community Energy Policy Statement makes community energy a central part of our energy ambitions and we are providing the best possible environment to help ambitious community groups reap the financial benefits of owning or hosting renewables schemes. I want to see more communities take decisions about their local energy system and to have an economic stake in new developments.”

Anne Schiffer, energy campaigner for Friends of the Earth said: “We wish to congratulate the Scottish Government and those communities involved who have made this happen. With the UK Government’s sustained and ideological attack on renewable energy, this announcement is fantastic news.

“What is important now is that we see this as a starting point of a citizen-led renewables transformation not the end. Scotland must continue to lead the way to an energy future that benefits both people and the planet. To ensure even more communities benefit across the country, we urge the Scottish Government to double the 2020 target to 1000MW as well as set an ambitious target of 2000MW for 2030.”

“Community ownership has been instrumental in achieving broader public acceptance of renewables and is vital in helping reach the Scottish Government’s 100% renewable energy target for electricity demand by 2020. Community energy helps tackle climate change and enables communities to use local natural resources to create jobs and strengthen local economies.

“Climate change means that we have to transform our energy systems from dirty fossil fuels to renewables. Community energy allows us to put people at the heart of that change.”

The positive aspects of the RenewableUK report come from what has been achieved under government support. With that now removed the future looks much more uncertain as confidence in the industry continues to diminish. Thousands of livelihoods are now under threat and billions of pounds of investment could be lost unless the government can come up with a new attractive clean energy strategy.

However nothing at present has been forthcoming. Schemes such as the Scottish government’s Community Energy Policy Statement should be applauded as they help greatly however they can only go so far. The proposed 1000MW is only a small percentage of our overall targets expected to be met by 2020. Where we go from here will be crucial. We await any announcement from the government on this with keen interest.

 

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