Record renewables growth threatened by ‘turbulent’ policy changes, says REA

Despite record employment levels and high growth rates for 2015, Britain's renewable energy sector looks set to suffer from repeated policy interventions that have "blindsided" the industry, a new report from the Renewable Energy Association (REA) has claimed.

The REView 2016 report, released on Tuesday (7 June), reveals that impressive growth in the renewables industry – which saw its value increase by 4% more than the rest of the UK economy last year – will be slowed over the coming years by “sudden and severe” policy changes.

The report reveals that the total market value for the sector in 2015 reached more than £15.9bn – a £982m increase and a growth rate of 6.6%. With the rest of the economy growing by just 2.5% the renewables sector has been able to add 4,760 jobs in this timeframe, bringing total employment numbers to 116,788.

But, even with renewable energy accounting for 22.3% of the UK’s power in 2015, the lack of movement in heat and transport generation, coupled with political uncertainty, looks set to create a “turbulent” future for industry.

“2015 was another record year for British renewables,” REA’s chief executive Nina Skorupska said. “Employment, investment, and deployment increased, while costs fell and the industry continued to mature. It was yet another year where the renewables industry outperformed UK growth rates.

“The industry was blindsided this year with over a dozen sudden and severe policy changes, which we expect will be reflected in next year’s report. While many businesses have been left reeling and deployment has begun to slow, as an industry we will persevere, we will innovate, and we will continue to grow.”

Heat and transport

Despite a record-breaking year both globally and nationally, the UK’s renewables sector has suffered from a “Jenga approach” to green policy that has seen Feed-in Tariffs (FiTs) slashed and government incentives scrapped.

With the Government’s lack of direction threatening to cause a renewable “landslide”, the report also reveals the extent of the UK’s renewable heat and transport gap.

Despite the 2009 EU Renewable Energy Directive establishing a 12% target for renewable heat generation and 10% target for renewable energy within the transport sector, these latest REA figures reveal that renewable heat generation is sitting at 4.6%, while renewable transport generation is just 3.2%.

The transport and heat targets, which have a 2020 deadline, have received minimal incentivised encouragement from policy changes, with a reform of the Renewable Heat Incentive (RHI) potentially creating a 98% reduction in the deployment of non-domestic biomass boilers and an end to support for solar water heating systems in the future.

Investor confidence

Created in association with Innovas and KPMG, the REA concludes that the damage caused by recent green policy changes from the Conservative Government is threatening the UK’s position as a global leader on renewables. FiT cuts have already seen the UK slide out of the top 10 for most attractive renewable energy markets.

With a major report from the Energy and Climate Change Committee (ECCC) recently warning that the Government is “denting” investor confidence in the renewables market, KPMG has moved to alleviate economic fears, insisting that low installation costs of renewable energy technologies and the increased emergance of new business models look set to drive renewables investment even further in the near future.

KPMG’s chair of energy Simon Virley said: “It has been a turbulent year for the renewables sector. But the falling costs of technologies, like solar and storage, mean that exciting business opportunities lie ahead and the sector as a whole can start to move beyond subsidy.”

Matt Mace

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