Posted on: 24/11/2017
In this week’s Autumn budget statement, it was announced that there will no new support for renewable projects until 2025. Chief Commercial Officer, David Cockshott, explains why he’s still optimistic for a renewable future.
Renewable energy has achieved many milestones this year, most notably the first coal-free day in the UK since the Industrial Revolution and the ‘greenest summer ever’.
While renewable generation has been growing, technology costs have been falling. In September 2017, we saw the first solar farm commissioned without subsidies and the cost of offshore windfarms halved in the second Contracts for Difference (CfD) auction.
With all this headline-grabbing success, it was inevitable that a Government already clear on its desire to reduce support for renewables, would take action.
Equal playing field
The Chancellor’s Autumn budget, announced on Wednesday this week, stated there will be no new subsidy support for renewables until at least 2025.
Critically though, existing commitments will be upheld, with the Feed-in Tariff running until 2019 and the Spring 2019 CfD auction with a budget of £557 million still taking place. The phased approach will be appreciated by a sector which has been subject to short-notice changes before.
This decision has been driven by the Government’s recognition of the fact that renewables are becoming cheaper, but only with a ‘gentle’ nudge will the sector be able to stand on its own two feet.
It’s fantastic to see the sector that we have championed since 2001 on the cusp of no longer requiring subsidy support, and we look forward to helping independent generators navigate the commercial requirements of a post-subsidy world.
However, we would also like to see other technologies such as nuclear power subject to free markets rather than subsidies – particularly given the strike price for nuclear is almost double the latest offshore windfarm price.
Creating an equal playing field for all energy technologies is the only way to ensure consumers get the most competitive prices.
Consumer demand is key
With subsidy support falling away, it is now crucial that business consumers take the lead on driving demand for renewable energy. After all, they account for over half of the electricity consumed in the UK.
We have seen a growth in the number of businesses procuring renewable electricity, but further demand could be the extra incentive for developers to secure investment for the new projects required to accelerate decarbonisation.
We have seen the importance of traceability for these customers when making their procurement decisions, and would call on all suppliers to be open and transparent to ensure customers know what they are buying.
With the potential for every additional megawatt hour of demand for renewable electricity to influence the creation of new projects, it’s important that companies procure responsibly.
The UK is very close to real change in the energy system and just a little more commitment can help achieve all of our objectives!