Renewables firms face a ‘cliff edge’ after 2019

The renewable energy industry faces a “shelf” in its growth in 2019 as the current targets and budgets that are driving its expansion come to an end, delegates to an industry conference have been warned.

Picture:  Ian Rutherford
Picture: Ian Rutherford

Speakers at the Scottish Renewables conference in Edinburgh said the UK government needs to extend the pricing guarantees offered by its recent electricity market reform (EMR) into the next decade to give investors in wind farms and other green energy projects more certainty.

Mike Thompson, head of carbon budgets at the committee on climate change, said: “It’s a cliff edge for the power industry after 2019. The government have not said where we are going. When a new government comes in next year, the priority is to get EMR extended.”

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Dan Perason, chief executive of tidal energy firm MeyGen, added: “We are lucky to have had the support we need under EMR and can get turbines into the water, but after 2019 there’s a shelf. You need the long-term security. The government needs to do its bit to provide that foresight.”

The new system brought in under EMR is already seen as less generous by the renewables industry. Niall Stuart, right, the chief executive of Scottish Renewables, said the mood had changed in the past year with potential developers facing greater risks as a fixed budget for backing renewables meant projects were having to compete against each other for funding through the price guarantee system.

Previously, developers could build wind farms and be confident the revenue support would follow. But, under EMR, firms “have to sink millions of pounds onshore, tens of millions of pounds offshore, before they know if they will gain a contract to support that investment and to take their project to completion”, Stuart said.

“Whether talking about onshore or offshore, small scale or large scale, heat or electricity – a whole new series of risks threaten to slow down investment in every part of the sector,” he added. “All of this is driven by one root cause – the supply of new renewables capacity outstripping the budget available to support it.”

With Scottish energy projects facing the additional uncertainty of September’s referendum, the UK government’s energy secretary warned that an independent Scotland could not assume the rest of the UK would buy its electricity.

Ed Davey rejected the SNP’s claim that Westminster would continue to pay for Scotland’s energy if it leaves the UK, saying it would become just one of many countries the remainder of the UK could turn to for the cheapest and most reliable deal.