The Renewable Energy Association (REA) has warned that mixed political messages run the risk of undermining new jobs and investment in the UK’s renewable sector.
Chief among the association’s concerns is the Prime Minister’s pledge to “roll back green regulations” as part of his ‘green levies review’. Despite assurances from government that renewable energy policies are not at risk, the REA believes that Cameron’s intervention and the continued politicalisation of energy policy has amplified the perceived risk for investors.
Yesterday energy minister Michael Fallon appeared to undermine reassurances from DECC that Feed-in Tariffs and Contracts for Difference would not be included in the scope of the review. He told the Environmental Audit Committee that all levies would be scrutinised.
The latest results of the REA’s business confidence survey show that companies are more confident that turnover, new business and employment will rise over the next six to 12 months thanks to the clarity provided by the Electricity Market Reform programme, the stability of key support schemes and the scale of the market opportunity. However, the survey predates Cameron’s green levies review.
REA chief executive Dr Nina Skorupska commented: “The renewables industry is poised to significantly grow its contribution to employment and economic recovery. The growing confidence in the power sector and the Electricity Market Reform programme is good news as the UK urgently needs new wind, solar and biomass to keep capacity margins healthy. New nuclear, CCS and shale gas will not be on-stream until the 2020s at the earliest.
“However, these green shoots are still fragile, and the UK’s chances of meeting the binding 2020 targets appear remote. Although government has confirmed that funding for renewables is not at risk in the ‘green taxes’ review, consistent messaging on Number 10’s commitment to the green agenda is absolutely vital.
“The government currently opposes a 2030 EU renewables target and is proposing to repeal the Planning & Energy Act. Reversing those stated positions would inject a huge boost into the sector and unlock much needed new jobs and investments.”
The results of the REA’s business confidence survey show that the industry’s outlook since the first quarter (Q1) of this year has markedly improved. For example, 42% of companies surveyed expected to increase employment over the next six to 12 months, compared to 25% in Q1. Similarly, 20% reported good or excellent access to finance, as oppose to 14% in Q1.
However, a number of the surveyed companies expressed serious concerns over the UK’s political commitment to renewables; 40% said that the government’s proposal to repeal the Planning & Energy Act 2008 sends a ‘poor or very poor’ signal to investors. While 73% of respondents had ‘poor or very poor’ confidence that the UK would achieve its 15% renewable energy target by 2020.
Responding to the REA’s business confidence survey Edward Billington, MD at Billington Bioenergy expressed frustration at the government’s treatment of green schemes, he said: “The government’s handling of the Renewable Heat Incentive has been absolutely shocking, and has made it almost impossible to invest in and run a business in this field. There have been too many delays and too much continual tinkering. All their micro-interference could wreck the market before it has had a chance to develop and normalise.”
Peter Dixon, director of Kepler Energy, added: “Government needs to be consistent and stop giving out contradictory messages, George Osborne, please note. This rattles investors.”
Dr Skorupska concluded: “Confidence is growing, but there is still a long way to go. We cannot afford for energy policy to become a political football in the run up to the election. We need investment now to bridge the generation gap and realise the potential for 400,000 renewable energy jobs by 2020.”
