As the renewable energy sector continues to grow at an unprecedented pace, is now the time for a more robust physical and regulatory infrastructure that can keep up with demand? Managing director of solar energy specialists Infrabee, Henry Brown (MRISC), believes the time for positive change has come.
At first glance, the task ahead seems relatively simple.
After all, the desire to replace our environmentally damaging dependence on fossil fuels with a much cleaner, greener energy source has long been on the agenda of campaigners and politicians alike.
The doubters seem to have accepted the need for change, the government is making the right noises when it comes to setting net zero targets, and awareness of what needs to be done to make our sick planet healthy again has never been greater. higher.
From land-based or floating offshore wind farms to onshore wind farms and solar projects, the need to both source and deliver environmentally friendly solutions has become big business, with some serious players at the table planning to transform Britain into a clean energy superpower. .
Such entrepreneurial spirit can only be good for our overall goal of achieving a net-zero planet, but the industry itself is now moving at such a pace that the physical and regulatory infrastructure is struggling to keep up.
An example where this is demonstrated is the current crisis around the timeframes for new grid connections, with an ever-increasing queue of ever-increasing connection offers that are not even given a fixed location for connection as the current system of regulated offers is overhauled.
The key to success will be ensuring that those of us who have entered the green energy field are supported with a degree of protection in a still fluctuating market.
A recent report from Renewable UK – the industry body supporting the UK’s renewable energy sector – highlights the need for a more flexible growth structure to not only ensure the continued and increasing sourcing of renewable energy, but also provide greater certainty to those investing in the projects . .
‘Revitalising the Contracts for Difference Scheme’ warns that the process in its current form will result in ‘failure to meet our legally binding net zero targets… and undermine investor confidence, depleting the capital needed for future projects in danger comes’.
The CfD auction system has served its purpose by providing a robust system that allows developers to operate safely with a degree of financial protection.
Fixed payment guarantees protect companies against fluctuating market prices, encourage further investment in renewable energy production and help limit the prospect of financial losses, while keeping wholesale prices stable through the provision of capacity.
But while the recent sixth round of auctions was by far the largest ever appointed by the state-owned Low Carbon Contracts Company (LCCC), with financial support of more than £1 million up for grabs across the renewable energy sector, we must heed the warnings and continue to evolve.
While the Renewable UK report highlights the plan’s undoubted successes in helping to deliver the 57 GW of capacity currently installed in Britain, it argues that progress is simply too slow and action needs to be taken sooner rather than later be taken, otherwise we risk undoing much. of the great work that has already been done. In particular, no figures are provided showing how many eligible projects were unsuccessful at the auction. We know at least one!
Perhaps the most sobering of all the figures from the report came from the Commission on Climate Change, which said that by 2030 ‘annual offshore wind installations will need to increase by at least threefold, onshore wind installations will need to double and solar installations will need to increase fivefold. .’
That’s a significant amount of infrastructure required in a relatively short time, and the CfD process as it currently stands is simply not equipped to deliver what is needed.
The report’s recommendations include calls for greater long-term security for developers by setting target capacity per auction pot, extending the term of CfD contracts from 15 to 20 years and introducing more flexibility over delivery times of projects.
Delivery times for approved solar projects are certainly a concern as schedule completion, which used to take between six and 12 months, is now being pushed back to more than two years as we grapple with frustrating supply chain issues.
It’s hard to dispute the report’s findings, especially at a time when there is a real desire within the industry to make this work.
Analysis of the recent CfD auction provides evidence of what has become a burgeoning industry, as 9.6 GW of renewable energy capacity was secured across 131 projects. The solar industry alone was awarded 4.5 GWp-dc across 93 locations, guaranteeing the highest capacity ever offered across all six auction rounds since its inception in 2014.
There were 47 different developers involved in the contracts awarded – more than double the 22 that were successful in the fifth auction round last year – while of those 47, only 19 had previously received CfD support, meaning 28 new developers/owners were.
The arrival of so many new stakeholders should certainly be heralded as a positive step for the sector as a whole, but are the levels of support sufficient to sustain it and also attract the new investors needed to deliver the necessary infrastructure numbers?
Without sufficient support to sustain them, there is a very real danger that some companies will disappear as quickly as they appeared, with higher development and regulatory costs causing major cash flow problems.
That would not be a good prospect for the green energy sector.
In a report from the website ‘Our World in Data’, the share of UK primary energy consumption coming from renewable energy sources in 2023 was 20.52%. While that is evidence that we are making progress, it is still a number that tells us we still have a long journey ahead of us.
Now is the time to invest in and develop the infrastructure we need so that together we can secure the future of our planet before it is truly too late.
Sounds simple? Let’s hope so.
