UK lagging other European nations on energy transition policy and investment, REA warns

The UK is not providing long-term certainty for would-be investors in many forms of clean energy, meaning they may instead choose to invest in other European markets, and that it may miss key government targets, a new report is warning.

UK lagging other European nations on energy transition policy and investment, REA warns

Pictured: Offshore wind turbines near Redcar, North Yorkshire

Published by the of Association for Renewable Energy and Clean Technology (REA), the report assesses the readiness of 13 national electricity markets across Europe for the massive scaling of clean energy generation in the coming years, as well as the rollout of electrified technologies in sectors such as heating and cooling. Also assessed is the need to scale batteries and build flexibility in to electricity systems.

Specifically, the REA looked at whether regulation, policy and market arrangement enable or restrict investment; whether the socio-political context helps or hinders investment and whether the measures are in place to foster the development, deployment and international trading of key technologies.

The UK, the report states, is not in such a strong position as several of the other markets. Finland comes top of the table. Also ahead of the UK are Denmark, France, the Netherlands, Norway and Sweden.

Norway produced more than enough renewable electricity in 2021, the report states, to meet all of national electricity consumption. In the UK, meanwhile, around two-thirds (63%) of electricity consumption last year could not be met with renewables.

The UK also underperformed all the other nations except Germany, Switzerland and Poland in terms of its smart meter rollout. Just 45% of properties in the UK have a smart meter, the report states. Spain and Sweden have achieved 100% coverage, and Denmark, Finland, Italy and Norway have exceeded the 90% milestone.

“Smart meters and associated communications systems are expected to provide a key component for monitoring and settlement of distributed flexibility service provision,” the report states.

One metric where the UK came in bottom of the table was heat pump rollout. Only one pump system was installed per 1,000 homes in 2021. The nations leading on the rollout are Norway and Finland, with 50 and 44 installations per 1,000 homes respectively last year.

Future  ambitions

Looking at likely progress in the future, the REA is estimating, using data from the European Parliament, that only 50% of the UK’s electricity consumption will be met by 2030. France and Poland also fare poorly, with a 40% and 23% mix listed. They are both coming from lower baselines, however, and France gets points for the fact that nuclear contributes so significantly to its electricity generation mix.

The report states: “All countries in this survey have demonstrated strong ambitions for realising clean energy targets and have strategies for achieving them. While much progress has been made, a key ongoing barrier to the energy transition is the effective implementation of open flexibility markets. The ability to unlock new flexible decentralised electricity resources in energy systems with high variable renewables is mostly falling short, and risks undermining the energy transition.”

It goes on to assess the renewables and flexibility gap for each nation through to 2030, as a proportion of electricity generation. The gap is largest in the largest of the electricity markets assessed, Germany, at more than 35%. In the UK, the gap is almost at 15%.

Drawing on previous research from the Carbon Trust and Imperial College London, the report states that investing in flexibility in the UK would deliver net savings of between £9.6bn and £16.7bn by 2050. It argues that, while the UK Government has strong top-line commitments on the energy transition, the fact that policymakers at present seem to take a short-term approach is undermining investment certainty.

Eaton and Eversheds Sutherland supported the REA in the development of the report.

REA chief executive Dr Nina Skorpuska said that the report “makes clear” thatdespite the warm rhetoric from the Government, the UK is lagging behind many other countries in preparing for the energy transition.”

“If this was a league table, the UK would be in the relegation zone,” she elaborated.“We now need to see significant action from the Government to remove the barriers facing our industry: proper long-term planning; prioritising and accelerating market reforms; and urgently addressing current investment barriers – all are desperately needed to help put the UK on the right path.

“I don’t underestimate the challenge ahead of us, but the cost of the Government moving too slowly on preparing for the energy transition is simply too great. Our country is in the midst of a severe energy crisis, but the Government will store up even greater problems for the future if they don’t act now.”

The publication of the REA’s report comes shortly after EY produced the latest edition of its bi-annual ranking of the attractiveness of renewable energy investment markets. The US and China held on to the top two spots, while Germany overtook the UK to claim third place following its federal government pledge for renewables to account for 80% of electricity generation by 2030.

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