Outlook for Renewables is Uncertain


A study from the Green Alliance shows that investment in renewables could fall by 95% over the next three years as subsidies end and future government policy remains uncertain. The government’s updated National Infrastructure pipeline shows that planned renewables spend falls off a cliff edge between 2017 and 2020, which demonstrates the position that had been expected after cuts were made to renewable subsidies in 2015.

This news arises at a time when record levels of renewable generation have been reported for 2016.  Recently published government statistics show that, in Q3 of 2016, the share of electricity generation from renewables stood at 25%, an increase of 1.3 percentage points compared to the same quarter the year before. This was attributed to an increase in renewable capacity, more favourable weather conditions, and lower overall electricity generation. Renewable electricity capacity was 33.4 GW at the end of Q3 2016, an 11.3% increase from a year earlier, with high growth over the year in solar photovoltaics and onshore wind.

Renewables investment has benefitted from support under the Levy Control Framework (LCF), which covers the period 2013-2020, but the government’s vision of future renewables policy remains unclear. Support mechanisms are a contentious issue because their cost is passed through to consumers’ electricity bills. Third-party costs, which include incentives for the provision of capacity from sources such as gas as well as the cost of the LCF, are already set to escalate over the next three years as the Department for Business, Energy and Industrial Strategy contends with higher levels of distributed and intermittent generation. Juliet Davenport of Good Energy said: “We must encourage the government to keep pace with the transition and not turn its back on the path to decarbonisation”.

Industry experts point to the requirement for further support before renewables can become subsidy-free. Clear policy direction in the form of an Emissions Reduction Plan is expected early this year  and is essential to provide investor certainty and encourage innovation as well as to put the UK on track to meet its commitments under the international Paris Agreement and the UK’s own domestic policy targets. The government is committed to a 57% reduction in emissions by 2030, against 1990 levels.

Nikki Wilson

Nikki joined Alfa Energy in September 2015 as a Carbon Management Consultant where she advises clients on legislation, compliance, and the implementation of carbon management schemes. She is a Practitioner member of IEMA, has a postgraduate diploma in Environmental Decision Making, and has over 15 years’ experience in energy consultancy.