BMI View: We expect growth in the UK non-hydropower renewables segment to slow down over the next decade, as subsidy cuts across the sector and heightened regulatory uncertainty will instil caution in investors looking to the market . Given that renewables subsidy spending under the LCF already is over budget for the next five years, we see little scope for the new Conservative majority government deviating from its austere renewables strategy.
|e/f = BMI estimate/forecast. Source: EIA, national sources, BMI|
|Generation, Non-Hydropower Renewables, TWh||62.304||68.059||70.381||76.932||80.150||82.250||84.105|
|Generation, Non-Hydropower Renewables, % y-o-y||10.642||9.236||3.412||9.308||4.183||2.621||2.255|
|Capacity, Non-Hydroelectric Renewables, MW||27,279.7||29,209.7||30,656.0||33,099.8||34,206.0||35,136.4||35,952.4|
|Capacity, Non-Hydroelectric Renewables, % y-o-y||21.3||7.1||5.0||8.0||3.3||2.7||2.3|
Latest Updates And Structural Trends
The Department of Energy and Climate Change (DECC) forecast that expenditures for renewables subsidy schemes will go over the GBP7.6bn 2020-2021 spending limit allocated under the Levy Control Framework by GBP1.5bn. We therefore see little room for the Conservative party majority government to deviate from its austere renewables policy.
In January 2016, the (DECC) announced cuts to the feed-in-tariff for solar power with a capacity below 5MW. The renewables obligations (RO) scheme for small-scale solar will also be closed on March 31 2016.
The Renewable Obligations Certificates (ROC) scheme for wind power is to be closed in April 2016, a year ahead of schedule for the full ROC closure. The government is also contemplating whether to exclude onshore wind from the competitive Contracts for Difference Auctions. This would mean that onshore wind would not be able to access any subsidy schemes. The rationale behind these reforms is that onshore wind can be cost-competitive without any subsidy support.
On July 22 2015, DECC announced that it would cut premium subsidies for biomass conversions and co-firing projects with immediate effect. This subsidy mechanism supported projects throughout their operation lifetimes and will be seen as a blow to the economic attractiveness of biomass conversion projects.
On July 8 2015, the first all-Conservative Party budget in 19 years held the announcement that businesses that use electricity that is generated from renewable sources will no longer be allowed to claim a discount from the UK Climate Change Levy (CCL). The CCL is a levy charged on electricity, coal and natural gas supplied to large industrial and commercial consumers in the UK - in an effort to encourage business users to become more energy-efficient and to reduce CO2 emissions.
From April 2015, new solar power projects with a capacity over 5MW have to qualify for support under the contracts for difference scheme, alongside other renewable energy technologies such as wind and biomass. This means developers will no longer receive financial incentives under the renewables obligation scheme.
The United Kingdom Renewables Report researched at source contains BMI Research's assessment of the current renewables market in United Kingdom. The report also contains historical data together with forecasts to end-2018 covering electricity generation (TWh) and electricity capacity (MW).
The renewables sectors covered in the report include Wind, Solar, Geothermal, Tidal and Wave, and Biomass (See Table of Contents for exact coverage). The report also features details on government green energy agendas and funding opportunities, as well as presenting a detailed list of key renewables projects currently being planned or undertaken in United Kingdom, their capacity, the timeframe of construction and their current status.
The report discusses the various energy policies currently in force, including targets, subsidies and the relevant infrastructure developments or limitations which might impact on renewables growth, analysing the potential effects of regulatory changes in conjunction with the background macroeconomic outlook. Finally, there is a general overview of the competitive landscape in United Kingdom, together with a detailed summary of the main utilities and manufacturers present and their business operations.
BMI's United Kingdom Renewables Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with unique independent forecasts and competitive intelligence on the United Kingdom renewables industry.
- Benchmark BMI's independent renewables industry forecasts for United Kingdom to test other views - a key input for successful budgeting and planning in the renewables market.
- Target business opportunities and risks in the United Kingdom renewables sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in the country.
BMI Industry View
Summary of BMI's key industry forecasts, views and trend analysis covering the renewables market in United Kingdom, regulatory changes, major investments and projects and significant multinational and national company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the renewables sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2010-2012) and forecasts to end-2018 for electricity generation (TWh) and electricity generating capacity (MW) for each individual renewables sector present in the country.
These in turn are broken down into:
Electricity Generation: Overall capacity (TWh), growth % change year-on-year, KWh per capita, % of Total Non-Hydropower renewables generation, % of total electricity generation.
Electricity Capacity: Overall capacity (MW), growth % change year-on-year, % of non-hydroelectric renewables capacity and % of total capacity.
These forecasts are in turn supported by explicit assumptions, in conjunction with analysis of the key risks to the main forecast.
Business Environment Rankings
BMI's Renewables Business Environment Rankings provide fully comparable Risk-Reward Rankings aimed at investors in the regional renewables market.
The rankings methodology makes sophisticated use of various industry, economic and demographic data point.