Subsidy cuts slow growth of independent renewables, report finds

However, independent renewable capacity still rose by more than 8% year-on-year in 2016-2017, despite the sector being hit by numerous subsidy cuts, the sixth annual Energy Entrepreneurs report from SmartestEnergy reveals.

The independent green energy company found that investments last year were a far cry from the peak of £418m seen in 2014, and that the pace of growth in the independent clean energy sector is now at its slowest since 2012. SmartestEnergy’s vice-president of renewables Iain Robertson attributed this slowdown to the ongoing shift towards subsidy-free renewables.

“The reduction in subsidies has inevitably slowed growth in the independent generation sector but these latest figures underline the significant role energy entrepreneurs continue to play as the UK shifts to a decentralised, decarbonised and digitised energy system,” Robertson said.

“As we enter an era where generators will increasingly be expected to ‘stand on their own two feet’ and operate without subsidies, they will need to become active participants in the new energy system to develop revenue streams.”

PPA uptake

The UK’s renewable energy industry has had to deal with with several subsidy cuts in recent years. The Government has announced that a new Levy Control Framework is being introduced to reduce costs on bills and provide more certainty to investors, with the Feed-in Tariff (FiT) scheme scheduled to close in April 2019.

However, despite this relatively turbulent backdrop, an additional 1GW of new independent renewable capacity was added in 2016-17, taking the UK’s total to 13.8GW. The 400 new projects commissioned during the year represented a rise of 6.2% on total project numbers at the end of 2016, meaning more than 8.4 million households can now be powered by renewable energy projects outside of the traditional energy supply sector.

This continued growth underlines the sector’s resilience in developing revenue streams using alternative funding options such as Power Purchase Agreements (PPAs). Indeed, SmartestEnergy’s estimates reveal that 6TWh of independent clean energy was consumed through corporate PPA’s last year, with the retail and banking sectors accounting for more than half of capacity. BT, Nationwide and Sainsbury’s are among the wave of UK firms that have put corporate PPAs in place to meet some of their energy needs.

Storage shift

The report goes on to highlight how the co-location of batteries with renewable energy projects remains an attractive prospect for future investments.

While recent discussion on the topic of co-location has primarily focused on adding battery storage to wind or solar projects, the SmartestEnergy report notes the potential of building multiple generation assets on the same site to share infrastructure.

“Demand for renewable energy continues to grow and there will be huge potential for those independent generators able to successfully navigate the new landscape ahead,” Robertson added. 

Indeed, Bloomberg New Energy Finance (BNEF) has predicted that the global energy storage market will double six times by 2030 as end-user businesses increasingly turn to battery technologies to boost energy resilience.

Sarah George