Are there still opportunities in Renewable Energy?

Posted 03/02/2016 By: Simon Cunningham

Despite the Government’s position, notably at the recent Paris climate talks, to commit to clean energy targets there has been significant inconsistency by the reduction of the financial support for renewable energy projects in the UK. It will remain difficult to reach any targets imposed worldwide without the availability of financial incentives. However, there will continue to be opportunities for renewable energy particularly, since the reduction in the carbon footprint will continue to be high on the climate change agenda. Increasingly businesses are required to demonstrate CSR and sustainability policies as a key criterion for winning contracts and therefore new business opportunities.

The main headline points of the recent changes from December 2015 are:

• The reduction of feed in tariff was not as harsh as expected and will now be cut by 64% rather than the original proposal of 87%.
• The initial cuts will come into place on 8^th February but there will be further reductions as from 31^st March.
• There is an allocated budget of £100 million per annum for feed in tariff payments which will be reviewed in 2018 – 2019.
• Projects for generation of over 50kw for solar PV and wind generation as well as hydro and anaerobic digestion plants have the reintroduction of a system of preaccreditation which will allow an increased level of certainty for investors and developments as to the level of return before incurring significant cost in materials and infrastructure.

The reductions in financial support have affected larger scale projects significantly.However, despite this reduction in available tariffs, renewable energy projects continue to offer low risk investment opportunities which could potentially provide significant benefits. This is particularly relevant where the electricity is used on the farm rather than being exported providing possible protection against any future energy price rises.

There may be larger business that will be looking to demonstrate their commitment to reducing their carbon footprint but without the buildings and land required to site the infrastructure. This could therefore result in these businesses looking to farm buildings or smaller scale wind/ biomass projects on farms. Therefore the landowners would themselves be seeing a direct benefit from reduced electricity prices but the developer businesses would indirectly demonstrate their commitment to sustainability targets.

Businesses can potentially look for innovative ways to become involved in the sector and supplement their CSR polices. They may look to demonstrate their commitment by indirectly assisting others to participate in alternative energy projects. Banks may offer competitive lending rates for funding renewable projects or favourable charge out rates may be offered by professionals in the industry such as land agents, accountants and even lawyers. Thus being able to demonstrate their commitment to the sustainability and CSR when pitching for new work and tenders.

In addition the cost of infrastructure is reducing significantly and there will continue to be development of new technology which will provide opportunities such as large scale battery projects for the storage of electricity produced off peak.

Therefore, despite the reduction in government subsidy, there will remain a need to reduce our carbon footprint and a need to protect against rising energy costs. It will be an interesting year ahead.