The International Energy Agency (IEA) held the UK launch of its Medium-Term Renewable Energy Market Report on Tuesday (15th December), followed by a panel debate featuring speakers from the Committee on Climate Change, Solarcentury and RES. The report analyses progress in adopting renewable energy sources in the electricity, transport and heat sectors; identifies challenges to further deployment; and makes projections through to 2020. Whilst the panel drew attention to some encouraging signs for the renewables industry, there were also repeated calls for policy certainty in order for the industry to continue to grow.
The launch of the report was timely, arriving soon after the conclusion of the COP21 climate talks in Paris. Michael Waldron, Renewable Energy Markets Analyst for the IEA, and Mike Thompson, Head of Carbon Budgets for the Committee on Climate Change, both hailed the deal reached in Paris as a source of optimism for the renewables industry, highlighting the important role renewable energy will play in achieving the COP21 pledges. The COP21 deal wasn’t the only source of optimism, with Seb Berry, Head of Public Affairs at Solarcentury, arguing that the IEA’s prediction of 10GW of UK solar by 2020 is “almost certainly an underestimate,” and stressing the unstoppable march of renewables towards grid parity.
Despite this positivity, the panel was nonetheless united in calling for policy certainty from the UK Government. The IEA report concludes that renewables are affordable but that variability of policies is the number one threat to necessary investment, and the panellists echoed this view. Rob Sauven, Group Business Development Director at RES, said that while RES will invest post-COP, investors “need an urgent signal to keep developing in the UK up to 2020.” Berry argued that Government decisions since the election haven’t led to policy uncertainty but a “policy assault,” with policies for solar and onshore wind having been “turned upside down.” He urged a change of course but conceded that “prospects are not looking great” for a softening of the Feed in Tariff (FiT) cuts when the Government responds to the consultation on the changes (expected later this week).
Consequently the key theme of the discussion was frustration at the speed with which renewable energy policy has changed in the UK since the General Election in May. All of the panellists agreed that subsidies for the renewable industry should eventually be cut, but argued that the speed with which they had been withdrawn had created uncertainty in the industry. In order to mobilise the scale of investment in renewables needed to comply with the COP21 deal, the Government must find a way of rectifying that uncertainty – and fast.
Despite the justifiable view among many in the renewables industry that they have been treated unfairly, recent research gives grounds for optimism. A paper prepared by Solar Media’s Finlay Colville shows that an unanticipated consequence of the changes could be to herald a more consistent roll-out of renewables, rather than the peaks-and-troughs we have often seen in the past. These intermittent peaks in demand were caused by companies rushing to deploy before an incentive deadline. However Colville contends that the post-subsidy future will see steady and predictable growth to 2020 of 1GW a year – ending the boom and bust cycles in the industry. This would return the UK to the forefront of renewables in Europe, and should be welcomed by both investors and the government alike. For those renewables companies that survive the removal of subsidies, there may be a small chink of light on the horizon.