Official figures on both the green economy and renewable generation have been released this month, which paint a positive picture of the value and strength of the sector.
Data from the Office for National Statistics (ONS) showed that the green economy was worth £46.2 billion to the UK in 2014. When split into industry type, energy efficient products had the greatest share of the turnover at £21.9 billion, followed by low-carbon electricity at £12.4 billion. The ONS definition of low-carbon electricity is renewables (including hydro), carbon capture and storage, and nuclear. The official statistics show that at the end of 2014, there were 96,500 businesses in the low-carbon renewables sector employing 238,500 full-time equivalents.
The split in turnover between different group activities can be seen in the chart below.
Data source: Office for National Statistics
Meanwhile, updated statistics from DECC showed that growth in renewables continued in 2015 with renewable electricity capacity standing at 30 GW by December, 22% higher than a year earlier. Generation from offshore wind rose by 30% and onshore wind by 24% as a result of both greater wind speeds and increased capacity.
However, it has been confirmed this month that government support for new offshore wind projects is being brought to an end as part of the Energy Bill, which has now concluded its passage through parliament. Following the initial announcement last year, this officially ends support for onshore wind under the Renewables Obligation (RO) with certain “grace period” exceptions. Existing accredited generators will continue to be supported.
The RO is a support mechanism for renewables under which suppliers have an obligation to submit Renewables Obligation Certificates (ROCs) to Ofgem, equal to a specified proportion of their total annual supply. These are obtained from accredited renewable generators who receive certificates for each MWh of power generated. Because these ROCs are required by suppliers, they carry a value and generators are able to sell them. The cost to suppliers is passed through to energy consumers’ bills and it is this element that DECC wants to control. The RO is due to close to all new entrants from April 2017 but will continue to run to 2037 for generators that are already accredited.
A number of recent reports have shown that onshore wind is becoming more competitive with gas and coal-fired generation and this, combined with the official signing of the Paris Climate Agreement, is encouraging industry to invest in wind. It is possible this could bring about sector growth without such high reliance on government subsidy. RenewableUK’s Chief Executive, Hugh McNeal, said: “…with the pain of the Energy Bill finally behind us, we need to look forward and find sensible ways to take advantage of wind power to ensure consumers’ electricity bills are as low as possible.”
Oil companies have been announcing various new green investments this month and Saudi Arabia has announced that it will sell state petroleum assets in a move to diversify away from fossil fuels. The question remains as to whether this signifies a real focus on low-carbon technologies by the oil industry and whether green investments will continue to be attractive as the oil price starts to trend upwards, amidst predictions that it will reach $70/bbl by the end of the decade.
