Clean energy companies are increasingly overlooking the UK

Home » Clean energy companies are increasingly overlooking the UK Published: March 13, 2024 This Article was Written by: Marjorie Glasgow - Ridge Clean Energy

Consistent and supportive government policy can keep low-carbon energy investment in the UK.

Some 63 per cent of UK energy companies are relocating, or plan to relocate, investments out of the UK to a more supportive market for their sustainability goals. And this shift could result in the UK missing out on the opportunity to capitalise on approximately £115bn in potential investments in the renewable energy sector.

These were among the troubling findings set out in a report published by UK Sustainable Investment and Finance Association earlier this month.

A lack of supportive policies for the energy sector within the UK has led to a significant erosion of investor confidence. Labour’s recent decision to scale back its Green Prosperity Plan from £28bn a year to under £15bn has done little to reverse this trend.

However, the headlines around Labour’s green U-turn and focus on the figures has taken attention away from what really matters, which is the need for consistent and supportive government policy.

The renewable energy industry is primed to invest billions in the UK, creating new jobs and delivering low-cost electricity. But without a reliable policy framework in place and a stable and predictable business environment, the UK will not attract such levels of investment.

Greg Jackson, the chief executive of Octopus Energy, recently made an important point when he stated that “capital goes where it can be deployed”. Currently, it is easier to build infrastructure in France and Germany than the UK. This is a significant barrier to investment in the UK.

When policy is consistent, investors can trust that the rules governing their investments won’t change unexpectedly, reducing risk. This is critical in the renewable energy sector, where projects often require substantial upfront capital and take years to become profitable. We must remove additional risk wherever possible, not add to it.

There are three key areas that the UK must prioritise to stabilise national planning policy and provide assurance to investors.

Firstly, we need a clear plan to upgrade grid infrastructure so it can accommodate an increasing share of renewable energy. The formation of an independent system operator – the Future System Operator – is a welcome move. We must also act with urgency on the Winser Report, which stresses the need for a system-wide mindset to the transformation of the UK grid as we revamp the grid at speed. Modernising the grid for renewable energy integration requires coordinated efforts across technological and economic domains. It is a multifaceted challenge, which is even more reason for clear regulatory powers to get the job done.

The UK should also streamline the approval processes for renewable energy projects to accelerate the deployment of renewable infrastructure. One option would be to put all renewables on an even footing when it comes to planning.

Take onshore wind. Despite being one of the cheapest energy sources in England, no new proposals for general-use windfarms were submitted for planning permission in England last year.

Dated planning tests mean developers must show that the proposed project is in an area designated for renewable energy in a local plan. This overlooks the fact that currently only 11 percent of local authorities across England have designated areas for renewable developments in heir plan.

Prime Minister Rishi Sunak committed to softening planning rules at the end of last year, but too much uncertainty remains. As it currently stands, one singular objection to a planning application could still lead to a refusal. Without significant reform, the onshore wind industry in England cannot justify investing the capital required to get us anywhere close to our targets.

Finally, national policy must acknowledge this importance of building trust with local communities. Successfully implementing and operating renewable energy projects, such as windfarms and solar panel installations, requires the use of land or resources that are integral to communities’ livelihoods and natural heritage. Developing projects in accordance with local interests leads to more sustainable and mutually beneficial outcomes. A collaborative approach enhances social acceptance and contributes to the broader goals of social equity and environmental justice.

This is by no means an exhaustive list of priorities. For example, we would also benefit from discussion on the opportunity of redistribution of tax, as is the case in the Canadian province of British Columbia. But addressing regulatory inconsistencies, alongside technical advancements, will go a long way to creating a framework that appeals to investors and supports the development of the renewable energy sector in the UK.

Written by Marjorie Neasham Glasgow, CEO of Ridge Clean Energy