The independent renewables sector has a crucial role to play in delivering the unprecedented levels of investment in low-carbon generation that the UK needs to meet our targets to reduce carbon emissions.
Role of Independents
In the renewable sector, independent developers have played an important role in delivering new capacity and we expect them to continue to make a material contribution to delivering investment and meeting our targets. Independent developers are responsible for over 70% of all capacity in planning in onshore wind, and around 4.5GW of offshore capacity. They also support competition and innovation in the UK energy market.
Reflecting this, the Government is undertaking work – as part of its wider reforms of the energy market – to ensure that independent renewable generators will be able to make use of the Contract for Difference – the new support mechanism for future low-carbon investment. This involves identifying factors that make it more difficult for them to attract finance to their projects or that might make it more difficult for them to achieve a reasonable price for the power they generate. This work will help identify what steps Government and industry are able to take to support independent renewable developers. The Government included powers in the Energy Bill to give it the flexibility to act to improve independents’ access to markets if that is necessary.
As part of this process, DECC held a workshop last week with stakeholders to present analysis undertaken by expert consultants into the problems faced by independent renewable generators when securing finance and selling their power, and how the implementation of Government’s Electricity Market Reform (EMR) might address some of the issues they currently face. Over 90 stakeholders from across the energy industry attended the workshop, giving valuable feedback on the analysis. Discussion focused on the impact that EMR – and the ‘Contract for Difference’ – might have on reducing the risks faced by developers, the size of the risks that remain and the impact of this on the ability to raise finance.
There were also presentations that looked at the ways in which developers might enter commercial arrangements to reduce their risks. Speakers explored the potential role that innovation might play in reducing the impact of intermittency on the electricity network (a key risk for all market participants) and on overall costs to consumers. The consultants’ final reports will inform the Government’s view of the issue as the Energy Bill goes through Parliament.
The workshop also explained the work that DECC is leading, working with stakeholders to support a smooth transition to the new arrangements and to identify what further steps might be needed to address the issues faced by independent developers. If you have any questions about the workshop or related topics please leave them in the comment section below and we will do our best to get back to you.