Feature

Market: UK 2013 - the year ahead


Rachel Parkes

So what can the UK's renewable energy industry expect in 2013? Could it be the year that sees the fog of uncertainty and disillusionment lift?

The list of scheduled decisions, plans and events is too long to list, but certainly, and most importantly, the Energy Bill should finally start to come into focus as it passes through Parliament, offering the industry the concrete details it needs to move forward, including the all-important strike price levels in mid-year.

In addition, the domestic phase of the Renewable Heat Incentive (RHI) is due to launch in the summer, whilst the final changes under the feed-in tariff (FIT) will be implemented in April, bringing that chapter to a close. The bio-electricity sector can expect some clarity on the sustainability criteria under the RO which has been holding up movement for months. And, following the launch in November of the Green Investment Bank, 2013 should also be the year that the bank starts ramping up lending to renewables projects (see box left).

However, there remain a number of flies in the ointment. The government's on-going cost assessment of onshore wind is scheduled to yield a result in early 2013, with the potential to trigger an additional review of the RO bandings for onshore wind. In addition, DECC and the Department of Transport appear to be making little more than incremental progress on meeting the UK's 2020 goal of sourcing 10% of its transport fuel from renewable sources – transport was barely mentioned in the roadmap.

And, industry commentators remain unsure as to the transition arrangements as the RO makes way for the Contracts for Differences (CfDs) system in 2017, something many hope the government will clarify over the next few months. “We need to make sure that investors, developers and generators have the certainty they need to get projects up and running now, because after March 2017 they'll have to go toward CfDs,” says James Hubbard, economics policy officer at RenewableUK, the trade body for wind and marine technologies. “Investors have to become comfortable with that.”

However, he is broadly positive about EMR and the prospects for 2013, something that the STA ceo Paul Barwell agrees with, especially as solar PV has seen a 50% price drop over the past year. He warns though that the economic situation can make renewable energy a hard sell.

“The domestic PV market has all the tools in place for a good level of deployment leading into spring and summer of this year with the customer being the clear winner,” he says. “The problem is getting that message out to the end customer in the current economic downturn.”

He adds: “We think large scale is going to be a very bullish market over the next few years. It will be tough because of the ROC levels we've been given but I think we can do it. And I'm quietly confident that we'll be able to work something out with DECC on the RHI for solar thermal. So that's all of our technology nicely supported.”

Meanwhile, Gaynor Hartnell, chief executive at the Renewable Energy Association (REA) believes that in the short term, PV will do well and onshore wind will struggle as long as the coalition government is in office. Offshore wind will have difficulty establishing the “critical mass” required for cost reductions, she predicts, while policymakers will finally come to terms with biomass technologies. “I think there will be a change of heart on biomass, with environmental commentators coming round to the fact that energy can be, and should be, a positive influence driving better environmental management of the world's forest,” she says.

In the long term, Hartnell says, the emergence of shale gas could potentially stymie the development of both renewables and nuclear. However, she is confident that renewables will have the last laugh. “In the longer term, renewables will inevitably prevail and dominate,” she says. “It is just a question of when.”

About: Rachel Parkes is a freelance journalist based in the UK covering energy issues

Renewable Energy Focus, Volume 14, Issue 1, January-February 2013, Pages 4-7

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