What does the future hold for the alternative energy market in the UK?

When the UK voted to leave the European Union, a huge shadow of doubt was soon cast over the direction of the alternative energy market in the UK. Yet in the months that have passed, has the future become any clearer?

The renewable energy sector has enjoyed relative growth in recent years according to Government statistics. However, Theresa May’s decision to axe the Department for Energy and Climate Change (DECC) as part of her post-Brexit cabinet reshuffle indicated an apparent shift in Government sentiment. It would seem that addressing climate change and growth in the renewables industry had fallen down the Government’s list of priorities.

Nevertheless, the role of the DECC was intended to be incorporated into the newly-formed Department of Business, Energy and Industrial Strategy, headed by Department Secretary, Greg Clark.

A press release issued by the Department on 9 November 2016 revealed a plan to facilitate the upgrade of the UK's energy infrastructure to increase clean energy investment. The Department announced a pledge of £730m annually into renewable energy projects coinciding with further Contracts for Difference (CfD) worth £290m that are to be auctioned in the near future.

In its own words, the Department announced that “the second CfDs auction will result in enough renewable electricity to power around one million homes and reduce carbon emissions by around 2.5 million tonnes per year from 2021/22 onwards”.

Whilst the move from the Renewables Obligation Certificates (ROCs) to CfDs had previously created uncertainty for the renewables industry under David Cameron, CfDs do appear to have the potential to generate great economical efficiencies. This has been demonstrated through the Department’s announcement that offshore wind project prices are now 25% lower than that set for the previous auctions for CfDs that took place from October 2014 to March 2015.

The Business and Energy Secretary appears to have taken a refreshingly strong stance over the importance of supporting and facilitating innovation in the renewables sector. Greg Clark’s Industrial Strategy promotes growth, through an economically and environmentally sustainable approach.

Since Greg Clark’s pledge, the British Government has indicated further aspiration to continue development of the renewables industry within the UK, with its ratification of the Paris Agreement in November 2016.
In January 2017, Nick Hurd, Minister of State for Climate Change and Industry, announced funding of £28 million for investment in smart systems and other energy innovation projects. Furthermore, as recently announced by the Department for International Trade, Danish-based DONG Energy has made several pledges towards a multi-national venture based in Scotland. These include commitment to build a new £60 million recycling and energy plant that can service over 110,000 homes, as well as further plans to invest £12 billion in renewable energy projects in the UK by 2020.

It is hoped, therefore, that Greg Clark’s new proposal will reassure investors that the UK is open and capable of supporting the long-term development of renewable technology and infrastructure. The Department has silenced initial concerns following the demise of the DECC and its enthusiasm will give businesses confidence that the renewable energy sector continues to be a priority for Government.

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