The UK’s renewable energy pipeline

Renewable energy is now firmly back on the corporate agenda, mainly in response to:

  • sustainability and carbon reduction targets originated internally and from stakeholders; and
  • growing pressure to control pass-through or non-commodity charges which now make up around 60% of a typical energy bill

Indeed, solutions such as on-site generation are increasingly being considered, given they not only produce low-cost, clean energy on site without green levy charges, but also offer considerable potential savings and carbon reductions.

As a result of such factors, alongside supportive changes in legislation ,  planning applications for renewable energy projects have boomed.

The UK’s pipeline of renewable energy developments is currently on an upswing, hitting four-year highs in 2019

Four-year highs

The UK’s pipeline of renewable energy developments is currently on an upswing, hitting four-year highs in 2019 after previously struggling through a period of uncertainty due to the chopping and changing of incentives and funding schemes, alongside difficulties achieving planning consent. In total, 24.7GW of renewable energy or storage capacity is now classed as ‘awaiting construction’ or ‘under construction’ across the UK.

Growth has been spread across several technologies and highlights the vital role that renewable energy must now play in the UK’s net-zero ambitions. However, the ability for onshore wind projects to once again access incentives and planning permission following a landmark policy change in March 2020 has seen a spike in applications for one of the cheapest and fastest to deploy generation options available.

Across the UK, planning applications for green energy projects have grown consistently for the past four years. Over the past three years, the rate of growth has seen a 75% increase in the number of planned projects. Clearly, there is continued demand for green energy projects, and while many of these applications will take some time to come to fruition, having a strong pipeline of projects will help to ensure continued growth for the sector.

What is driving the growth?

Many small-scale renewable generators were constrained when significant cuts in support for onshore wind and solar generation were suddenly announced in 2015 and 2016, respectively. Ending the Renewables Obligation for onshore wind projects that did not already have planning consent, land rights and a grid connection acceptance in place effectively slammed the door in the face of new projects, while a year later it was announced small-scale solar projects would see a 65% cut in incentives.

It was changes in legislation that saw much of the UK’s renewable energy development outside of offshore wind slow down, and it has been changes in legislation that are now driving the new upswing. A moratorium on new onshore wind projects in England and Wales was lifted in early 2020, allowing new onshore wind projects to apply for subsidies and planning permission for the first time in four years.

Changing priorities

The UK’s ambitious pledge, supported by legislation passed last summer, to cut emissions to net-zero by 2050 played a key role in reversing the decision, with Government climate advisers recommending that onshore wind capacity needed to triple in the next 15 years to meet these targets. While onshore wind projects will still need to contend with strict planning codes and opposition from local communities, something that the technology has traditionally struggled with in many areas of the UK, campaigners broadly celebrated one of the cheapest forms of energy generation being brought back into the fold.

BEIS’ introduction of the Smart Export Guarantee from the start of 2020 as a replacement for the closed Feed in Tariff of old also has also played a role in incentivising new renewable development. This scheme provides green energy generators, as well as businesses with on-site generation, with a guaranteed additional source of revenue, providing payments for additional electricity exported to the grid.

While new incentives and mechanisms such as Power Purchasing Agreements are available, many renewable technologies now must ideally demonstrate commercial viability on their own, without reliance on Government support.

Recent and continuing reductions in the cost of solar PV and wind turbines will ensure these technologies feature heavily in all future UK energy scenarios, particularly as the country grapples with the challenge of achieving net-zero. The same factors mean that on-site renewable projects offer a valuable opportunity for businesses to reduce both costs and carbon footprint. With growing numbers of projects under construction or passing through planning, the time to act is now.