29/03/2023 | Offshore wind

RenewableUK urges PM to take bold action to boost green economic growth on Energy Security Day

29 March 2023 - RenewableUK press release


In the run-up to the Government’s Energy Security Day announcements tomorrow, RenewableUK’s Chief Executive Dan McGrail has sent a letter to the Prime Minster setting out measures which the Government could take to stimulate green economic growth.


The letter warns that “there has been a range of unhelpful interventions from Government in recent months, coupled with ambitious new reform packages from other countries to attract investment in clean energy. Taken together, these circumstances mean that Government will not achieve its ambitions for the sector. Without new measures, the UK risks not only losing the future jobs and investment in technologies like offshore wind, but it may also sleepwalk into a crisis that imperils the socio-economic benefits the sector has delivered to date”.


Mr McGrail points out that the cost of building renewable energy projects has increased due to inflation, interest rate hikes by central banks and the rising costs of raw materials - and that current instability in the financial sector will increase the costs of capital and borrowing even further. This puts huge financial pressure on projects and squeezes UK-based supply chain companies by reducing demand for their products and services.


The letter states that “the narrow perspective on keeping bills low by driving unsustainable prices for our cheapest form of electricity generation will impede the delivery of the lowest cost electricity system, hurt the public through negative impacts on good-quality jobs in coastal communities and reduce investment flowing into the UK”.


RenewableUK’s CEO contrasts the lack of action by the UK Government with the pro-active stance taken by our main competitors. The EU has published its Green Deal Industrial Plan with targeted support for renewable technologies and supply chains, flexible state aid rules and a streamlined regulatory framework. The USA’s Inflation Reduction Act offers easy-to-navigate tax breaks and subsidies to clean energy investors worth nearly $500 billion. Mr McGrail warns that “intensifying global competition for renewables investment, supply chains and skills means that we cannot keep relying on the toolbox that got the sector where it is today - we need to innovate and outsmart our competitors”.


Mr McGrail expresses hope that this week’s Energy Security Day will include a much-needed set of joined-up measures to respond to the bold investment packages which our competitors have put forward. He highlights the urgent need to create a stable business environment and restore confidence for investors in renewable energy, with targeted fiscal incentives which go beyond those already announced. He points out that changes to Capital Allowances announced in the Spring Budget only last for three years, whereas the EU and USA are offering 10-year frameworks for their tax credits, offering greater long-term certainty for infrastructure investors.


Mr McGrail also urges the Prime Minister to reform the cumbersome planning system and speed up the slow pace of grid development. He recommends giving the regulator Ofgem a new mandate which puts net zero at the heart of its decision-making process to enable vital new grid infrastructure to be installed faster. 


He assures the Prime Minister that “we remain committed to supporting you in delivering the Government’s target of 50GW of offshore wind by 2030 and a decarbonised power system by 2035 - but achieving this will not be possible without a willingness to adapt to current challenges and embrace new opportunities”.


Siemens Gamesa Renewable Energy’s UK Managing Director Clark MacFarlane said:


"We need the UK government to fully recognise that renewable energy, especially wind generation, is now on the same level of importance as oil and gas and requires similar levels of support to ensure it delivers what the UK needs to reach crucial Net Zero targets".


Vestas Wind System’s Senior Vice President, Offshore, North & Central Europe, David Rooney said:


“Offshore wind is at a critical juncture in the UK. It’s an established market with a world-class resource and significant further potential, but investor confidence is at risk. Policymakers need to act decisively to ensure projects remain viable in the face of significant supply chain inflation and that the UK remains an internationally competitive place to invest. Otherwise, we’ll miss out on the clean, affordable and secure electricity as well as jobs that a major build-out of offshore wind will deliver”.


Hitachi Energy UK & IE’s CEO Laura Fleming said:


“We will play a leading role in delivering the infrastructure for the energy transition globally.  In order for the UK to remain at the forefront of delivering affordable, secure and green energy we need definite plans to tackle issues such as planning reform and making investments attractive and we need them now. To make the UK an attractive place to develop our supply chains we need a long term industrial strategy for green growth, especially as the US and the EU have raised the stakes through their plans for green investment”.


RenewableUK’s Retaining the UK’s leadership in renewables report provides further details  on our recommendations which would enable the UK to retain its competitive advantage in the global clean energy market.


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Notes


RenewableUK’s members are building our future energy system, powered by clean electricity. We bring them together to deliver that future faster; a future which is better for industry, billpayers, and the environment. We support over 470 member companies to ensure increasing amounts of renewable electricity are deployed across the UK and to access export markets all over the world. Our members are business leaders, technology innovators, and expert thinkers from right across industry.


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