The UK renewable energy market continues to develop and adapt in spite of an ever changing regulatory backdrop. From the low we experienced in 2015 with the government’s early closure of the Renewables Obligation (“RO”), our resilient industry has successfully responded in typical fashion as is evidenced with some notable highs throughout 2017.
Record electricity generation
Renewables’ share of electricity generation was a record 30% in 2017 Q2, up 4.4 percentage points on the share in 2016 Q2, reflecting both increased wind capacity and wind speeds, as well as lower overall electricity generation. By the end of Q3 renewable electricity capacity was 38.9 GW, a 13 per cent increase on the 2016, with half of the annual increase coming from onshore wind and one quarter from offshore wind.
Subsidy free solar
In September, we witnessed the opening of the UK’s first subsidy-free solar farm, complete with storage, by Anesco. While the site benefits from unique advantages which mean that this does not necessarily form a blue-print for subsidy free solar across the UK, it does still represent material progress in a technology which was only recently in disarray following the closure of the RO. We continue to work with solar developers, investors and funders to achieve a financial model that will enable the right subsidy free solar projects to move into construction and operation.
Subsidy free onshore wind
As a result of competition throughout the development and supply chain, innovative financing solutions and also greater focus on offtake arrangements, we are witnessing the key steps necessary to enable subsidy free onshore wind to become reality. While developers and construction companies conclude the build out of the last RO projects, the activity in preparing the next phase of subsidy free wind is very real.
Offshore wind’s success in the latest CfD auction
With the majority of capacity in September’s second CfD allocation being allocated to offshore wind clearing at a strike price of £57.50/MWh, there is now unequivocal evidence that renewable energy at scale is good value for money when compared to fossil fuels and Nuclear. The acquisition of shares in Sherringham Shoal (317MW) by Equitix and Dudgeon (402MW) by China Resources Power Holding at the end of 2017 is proof once again that this asset class is now highly sought after by institutional capital on a national and international basis.
Growing system need for storage / flexibility as penetration of intermittent renewables grows has coupled with rapidly falling costs to drive growth. With Li-ion battery costs down an estimated 80% since 2010, deployment is anticipated to grow fast: from trivial levels of deployment on the system, to 0.6GW at the end of 2016 to up to 8-12GW by 2021 in some scenarios.
With the recent recruitment of two senior energy experts into our awarding wining corporate finance team, PKF Francis Clark are continuing its support of the energy industry through the provision of leading commercial and Energy Sector Financial Advisory services at the development, primary and secondary phases of the market.