U.K. Needs to Double Renewables Investment

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- The U.K. has set out its commitment to renewable energy but said that outside investment will have to double to more than £110 billion ($172 billion) in the next eight years if the country is to hit its green energy goals.

Speaking at the Global Business Summit on Energy, Edward Davey, the U.K. Secretary of State for Energy and Climate Change said: "In less than 10 years, we have to find 20 gigawatts (GW) of generating capacity -- and £110 billion of investment in electricity generation. Even if we go full-speed ahead on energy efficiency, we still expect demand for electricity to rise. We're talking about building as much as 18 GW of offshore wind by 2020, if costs come down; and 16 GW of new nuclear power by 2025."

He added: "This is the biggest overhaul of our energy infrastructure for decades. It brings huge opportunities right across the supply chain. And it's driven not just by need -- a fifth of our power plants will close by 2020 -- but also by our climate commitments. We have legally binding renewable energy targets for 2020; carbon budgets setting the level of emissions out to 2027; and a 2050 target under the Climate Change Act."

The government recognised that existing players in the energy sector are not going to be enough to fund the so-called "green energy revolution".

"Existing players don't have the capacity to invest at that kind of scale," Davey admitted. "We need new players, including institutional investors, who have the muscle to make big investments in technologies with high capital costs. That means doing everything we can to take the risk out of investing in the UK's energy markets. From a government perspective, that means making sure we keep political risk to a minimum. Our priority is to set a clear policy direction. To reassure investors and entrepreneurs alike that the U.K. will remain a great place to do low-carbon business."

Last month, the government published its new subsidy levels for renewable energy projects, claiming they will help generate up to €32 billion ($39 billion) in investment between 2013 and 2017. New levels of subsidies, known as Renewables Obligation Certificates (ROCs), were revealed and predicted reductions proved to be a lot less harsh than previously thought. In particular, there are no cuts in support for offshore wind projects in the short-term, in an effort to get the sector established. Any reductions for offshore will not come into effect until April 2015, while onshore wind, which is far better established, will see a subsidy cut of 10% from next year. For additional information see July 30, 2012, article - U.K. Predicts €32 Billion Renewables Boom.

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