Offshore wind targets help UK retain renewables investment ‘pull’

Plans to boost offshore wind helped the UK retain its position as the eighth most attractive destination globally for investment in renewable energy, according to the latest ‘renewable energy country attractiveness index’ (RECAI), produced by EY.

China and the US are first and second, respectively, in the ranking of 40 countries. France moved up two positions to 3rd because of its new focus on floating offshore wind and a doubling of annual targets for onshore wind capacity additions.

Also ahead of the UK are India, Australia, Germany and Japan.

The UK’ plans for 30GW of offshore wind by 2030, compared with 8.2GW by the end of last year will require investment of £250 million over the next 11 years, in exchange for the £557 million in subsidies for renewables already announced.

But Ben Warren, EY global power & utilities corporate finance leader and RECAI chief editor, said: “While the Offshore Wind Deal is extremely positive news for the UK renewables sector and will help to attract significant investment over the coming years, the announcement regrettably follows the withdrawal of support for onshore renewables in 2016 that has slowed UK sector growth.”

He said that last year, just 598MW of onshore wind was installed in the UK, down from 2.7GW in 2017. Changes to network charges – which have been favouring decentralised renewables, energy storage and demand-side response – will hamper investment in the sector going forward.

 

New investor landscape

Globally, the RECAI found that projects were attracting less subsidy. They  were more exposed to wholesale power prices and market imbalance and were more likely to access corporate energy buyers who would underwrite clean energy projects with power purchase agreements.

Warren said: “In this more complex subsidy-free environment, renewable developers must work harder and smarter to find the revenue certainty they need to finance or monetise their efforts. Europe has led the way with unsubsidised projects in areas with good renewable resources, and multiple projects across the Nordics, UK, and Spain are being developed – backed by private investment and corporate power purchase agreements (PPAs) to provide the required stability.

“For the renewable energy market overall, however, a future without government subsidy is one that will no longer be vulnerable to sudden shifts in policy, or to retroactive changes to promised tariffs. It will be one where market forces impose discipline, drive efficiencies and accelerate the cost reductions that have allowed the sector to stand on its own two feet.”

Bloomberg, last year power purchase agreements (PPAs) supported 13.4GW of clean energy generation, more than double the 6.1GW of PPAs in 2017. The latest RECAI indicates that new companies and new countries are becoming more comfortable with a subsidy free renewable energy environment.

In some jurisdictions such as Japan and Indonesia there are regulatory barriers to PPAs but in others, including Taiwan, France, Spain and Australia – changing conditions are resulting in PPA volumes taking off.

Read the full report

Further reading

Offshore wind delivers growth for Crown Estate despite low wind year

Offshore wind initiative aims to grow the industry’s annual exports to £2.6 billion

Offshore wind leasing round delayed to refine tender process

Offshore wind sector deal: the industry responds

How much credit could wind and PV get in the Capacity Market? National Grid suggests just a few percent

Offshore wind sector launches careers website

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