Further investment in and financing of UK renewables would be assisted by allowing a wider range of technologies to bid for subsidies, a seminar has heard.
The lack of subsidies has impacted on the number of new, bankable projects being established in the UK, despite there being a huge amount of money available from private investors and 2050 carbon-neutral targets fast approaching.
This was one of the topics raised at a seminar entitled ‘Opportunities and Market Trends in the UK Energy Sector’, hosted by Hewitsons solicitors in London, with presenters from the law firm, Budd Legal, the Association for Renewable Energy & Clean Technology (REA), and Cornwall Insight.
Speaking after the event, Hewitsons partner Nick Fothergill commented: “These are undoubtedly dynamic and exciting times for the UK energy sector as the movement towards renewable power gathers momentum, and the UK has become the first major economy to pass a net zero emission law.
“In the coming years, our daily lives will become more driven by the need for electricity – from appliances in our home to our vehicles. Nuclear power will take up some of the slack that is missing when coal disappears, but at the same time, we are going to need more renewable power.
“The UK is the global leader in offshore wind projects and there are several other important emerging initiatives, such as battery storage and the increasing electrification of heat and transport in the UK, as well as an established energy from waste sector, but other technologies, such as onshore wind and solar power, would benefit from being able to compete for subsidies once again.”
Speaking to an audience of lawyers and other industry professionals, Daniel Atzori, research partner with Cornwall Insight, said: “Government subsidies have so far been the main enabler of decarbonisation. That said, the amount of capital waiting to be deployed is huge, whilst there is a shortage of bankable projects.”
He added: “For the UK to become carbon neutral by 2050, large amounts of capital will have to be invested. The UK has a long and successful history of partnerships between the public and private sectors and the resulting know-how will be crucial to access the capital needed to decarbonise the UK economy.”
Neil Budd, director of niche energy and infrastructure law firm Budd Legal, said: “Everyone is waiting for renewables to get to grid parity but we are still not there. In the meantime, investors who were previously focused on renewable projects are looking at the Capacity Market and battery storage.
“The Capacity Market was suspended last year due to a legal challenge, but was recently reinstated and this has given a noticeable boost to investor confidence for gas-peaker projects. Whilst some investors may be uncomfortable in investing in non-renewable technologies, the reality is that we need back-up power to keep the lights on when wind and solar are not generating and there is a growing acceptance by institutional funders that these types of projects are worth investing in.”
Nick Fothergill concluded: “Further investment in and financing of UK renewables would certainly be assisted by allowing a wider range of technologies to bid for subsidies, although the growing availability of power purchase agreements is to some extent helping to fill the gap. Equally, investment in batteries and other energy storage projects will be greatly assisted if these projects have the benefit of back-up power contracts, allowing them to build up a revenue stack.
“The UK energy sector is certainly going through a period of change, but change can bring investment opportunities.”
ENDS
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