Green business is big business. Let’s not miss out.
At last, some positivity.
That has been in short supply for those working in UK wind, solar and tidal, given the slew of government policies hitting their sectors.
Yet, a largely positive prognosis for UK renewables was given by business leaders, academics and government representatives at an event held by the Westminster Environment, Energy & Transport Forum last month. Why are they so optimistic?
Speakers highlighted the improvements being made across the board to energy storage tech, network upgrades and carbon reduction commitments. We are starting to make substantive progress towards a green economy.
This was most apparent in the growing quantities of private sector investment being ploughed into clean energy. Tom Murley, head of renewable energy at private equity firm HgCapital, told us that 2015 saw the highest levels of green investment in Europe on record, and that the UK received the largest share of all European states.
He also said we could expect to see investment continue to grow. Plunging oil and gas prices are harming the business models of those in the fossil fuels sector. This means that pension funds, hedge funds and well-capitalised institutions are seeing their traditional safe havens dissipate. Renewable energy infrastructure that can service us for decades into the future is looking like a good long-term bet.
But Murley’s message came with caveats.
He said that financial institutions seeking investment security were disproportionately likely to invest in projects approaching, or already in, construction. Furthermore, it is larger projects that would receive the majority of investments, as only at this scale will significant financial returns be generated. Developers must still take the financial risk to get projects to a stage where they are investible, or find others who will.
Others struck a more cautious note, highlighting that investors require a predictable policy environment and, on this front, the UK fares badly. In recent months, we have seen the government axe commitments to wind, solar, tidal and others.
It was Michael Rutter, director of clean energy for the UK government’s Department of Energy & Climate Change, who took to the podium to give the government’s take on —or defence of —our renewable energy future.
He said that cuts to subsidies benefited consumers, and that as the cost of technology comes down, so should support. He reminded us of Amber Rudd’s speech last year, where she made clear that energy security was the government’s main energy policy concern. That onshore wind is now being excluded from this secure future, seems unjustified, given its cost parity with gas fired electricity. He also drew our attention to Siemens’ new turbine blade manufacturing plant in Hull, and the 10GW of offshore wind installation we should expect by 2020. This overlooks the ambiguous future targets that the government has set for offshore wind production, and avoids the criticism that Siemens has given the UK government for its policymaking.
A burning question is how the government can afford considerable subsidies for new nuclear power plants, which have 10-15 year construction periods, but is strapped for cash when it comes to renewables. Rutter’s response was that it makes sense in the government’s calculations.
Investment in, and knowledge of clean energy is at levels we’ve never seen before. Look to Paris –governments, businesses, consumers are listening. Green business is big business, but the UK is still in danger of missing out.