Energy providers demand government incentives to stop UK providers losing out on green projects
The energy sector is ramping up pressure on the government to bolster investment in green projects, with Renewable UK the latest to raise concerns the country could be overtaken by rivals such as the US and EU.
The industry body, which supports wind and tidal energy, has called on Downing Street to bring in fiscal incentives such as new capital allowances for renewable technology.
It also favours sustained supply chain investment in the UK to expand green jobs, and speeding up the planning process – with offshore wind developers waiting an average of five years for planning approval under current restrictions, and some projects taking up to a decade to secure a grid connection.
Onshore wind also remains effectively banned under current restrictions, even though projects could in theory take as little as a year to complete from development to generating, according to Renewable UK.
Alongside incentives, the group has urged the government to set sustainable prices for renewable electricity in in this year’s upcoming auction for clean power, which takes into account the affect of inflation on the rising cost of labour and raw materials.
Renewable UK argues these measures are essential for ensuring the UK can boost offshore wind generation in line with energy security targets, while commercialising innovative technologies like floating wind, tidal stream and green hydrogen.
Executive director of policy Ana Musat said: “We’re urging the Chancellor to look carefully at the recommendations set out in this report ahead of his spring budget, as the renewable energy sector is facing a perfect storm this year, with inflation squeezing out already tight profit margins, and fierce international competition for investment, skills and supply chains.
“The US and the EU are in a race to offer incentives to clean energy investors, and the UK cannot take its leadership position for granted. A combination of fiscal measures and smart regulation will create a business environment which can boost Britain’s energy security, reduce consumers bills and tackle climate change at scale, enabling us to reach our net zero goal as fast as possible”.
Commenting on the report, the Conservative MP for Cleethorpes Martin Vickers added: “The UK has the talent and expertise to be a world leader in renewables, particularly wind power. The recommendations, if implemented in full, would turbocharge local economies up and down the country creating over 100,000 jobs in the wind industry, cheaper energy bills for households and better paid work for hardworking families.”
US green energy subsides start net zero race
Renewable UK’s report follows the US President Joe Biden passing the Inflation Reduction Act last year, which offers vast subsidies and tax breaks for green energy projects developed Stateside.
The $738bn package includes $391bn of committed spending on clean energy – making it the largest piece of federal legislation ever to address climate change.
It features tax credits to supply chain companies to manufacture components for wind farms which are worth $120m for every new gigawatt of wind farm capacity.
By contrast, the UK has introduced the Electricity Generator Levy – a 45 per cent tax on legacy renewable and nuclear generators.
This is despite plans to vastly ramp up renewable generation as part of the energy security strategy, which requires investment from established players in the market.
It follows yesterday’s report from fellow industry body Energy UK, which warned the country’s energy security and net zero ambitions are at risk
Energy UK’s latest report on industry investment argues that the financial climate for ramping up renewable spending and boosting low carbon generation has deteriorated significantly in recent months, threatening to undermine the country’s ambitious green agenda and damage the wider UK economy.
It argues a range of factors are stifling green investment including inflation, interest rates, supply chain difficulties, planning hurdles and poorly designed windfall taxes.
This has driven up the cost of some new low carbon projects as much as 50 per cent, the industry body reports.
When approached for comment, a government spokesperson said: “The government has consistently attracted investment in renewables. Since 2010, the UK has seen more than a 500 per cent increase in the amount of renewable electricity capacity connected to the grid while through contracts for difference we have awarded contracts totalling almost 27GW of new low carbon capacity to date.
“We are consulting on reforms as part of the review of electricity market arrangements, including changes to the wholesale electricity market that would stop volatile gas prices setting the price of electricity produced by much cheaper renewables – cutting the cost of electricity for consumers in the long term and providing certainty for investors.”