DB Climate Change Advisors (DBCCA), the climate change investment business of Deutsche Asset Management, today released the first comprehensive review of the U.K.’s renewable energy programme since the U.K.’s Comprehensive Spending Review (CSR). The report, U.K. Renewable Energy Investment Opportunity: Creating Industries and Jobs, identifies the investment opportunity, benefits, and roadblocks as the country tries to meet its 15% renewable energy goal by 2020.
According to Mark Fulton, Global Head of Climate Change Investment Research, DBCCA, before private investors will commit large amounts of capital to the renewable sector there must be transparent, long-term and certain regulations governing carbon emissions, renewable energy and energy efficiency. “The U.K.’s energy policy has increasingly demonstrated transparency, longevity and certainty and now, in order for it to firmly take hold, needs to enter a period of stability over the coming years without major changes,” he said.
Fulton added that there is now a need for investment from the private sector in U.K. energy systems. “As existing energy plants are retired, there is an opportunity both to fill the gap and to enhance energy security by investing heavily in new, renewable sources of energy,” he said. “But the renewable policy landscape has to enable the investment case to be made in the U.K., and there is evidence that the new coalition government is serious about doing this.”
Based on DBCCA research, the U.K. has some of the best renewable energy resources in the world for power generation, especially for offshore wind and marine energy. There is also a large, untapped market opportunity to develop a new renewable heat industry with huge potential environmental and economic gains from biomethane injection. The scaling up of renewable energy manufacturing and production in the U.K. has the potential to create thousands of jobs and to rejuvenate parts of the country historically known for manufacturing and industry.
The FiT and RHI
The introduction of Feed-in Tariffs (FiT) to the U.K. renewable power sector in April 2010 has greatly improved the investment environment for renewable technologies and should be extended to include other renewable technologies such as offshore wind and marine renewable technologies. Following the CSR’s recommendations for reviews, if volume caps are too restrictive this will hamper long-term growth of renewables.
The report also looks closely at the ground-breaking Renewable Heat Incentive (RHI), scheduled to commence in June 2011 to help the U.K. achieve a 12% contribution of renewable sources in its heat supply by 2020. It concludes that the RHI offers an opportunity for the UK to distinguish itself as a market leader in renewable heat and develop a sizeable industry, but much rests on the 4p/kWh biomethane tariff being adjusted upwards to at least 6p/kWh to match other key European renewable heat markets such as Germany. Biomethane as a heat source is the most effective use of the RHI scheme and represents a far more efficient use of biogas than power generation.
The full report is available under
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