This report is essential reading for any business involved in, or considering participating in the UK renewable energy market. It provides relevant and reliable data on the health of the sector with a focus on deployment, investment and jobs.
While it highlights the success of the sector in attracting investment over the past four years, despite the difficulties created by the financial crisis, it also reveals that we have a two tier renewables market. The vast majority of investment goes to renewable electricity assets, despite the fact that the UK has challenging targets for renewable heat and transport.
Looking at where policy efforts have focussed over the past few years, the greatest emphasis has been on restructuring our electricity market support to introduce Contracts for Difference (“CfDs”) under the electricity market reform programme. With this process in the final stages of enabling legislation, we now need to look to kick start the renewable heat market, if we are to have any prospect of achieving the 2020 renewable energy targets.
In total, there was an estimated £29.8bn of investment in the renewables sector during 2010-2013, with most of the investment in renewable electricity (£27.7bn). In the renewable electricity sector, investments have mainly been focused on onshore wind (£6.9bn), offshore wind (£7.7bn), solar PV (£5.5bn) and biomass (£4.7bn). The remaining investment was in renewable heat (£1.4bn invested during 2010-2012) and renewable transport (£0.7bn).
Looking forward to the investment required in renewable electricity and heat to reach the UK’s 2020 targets (based on government’s deployment forecasts), electricity is expected to attract the main share of the capital, (£40.8bn) although the investment in renewable heat is also expected to increase in importance relative to historical levels (£23.6bn - primarily bioenergy (£20.1bn) and heat pumps (£3.5bn)). Of the renewable electricity investment, this continues to be dominated by investment in offshore wind (£12bn) onshore wind (£8.1bn) and solar PV (£9bn). Based on DECC modelling, investments are projected to peak in 2014 and thereafter decline in the run-up to 2020.