BMI View: The decision to not include onshore wind and solar power in the second CfD auction, on the back of a series of subsidy cuts for the technologies over 2015, supports our muted growth outlook for the UK non-hydropower renewables sector. While offshore wind power will continue to register robust growth, as a result of continued robust government support, we do stress that there is scope for delays to projects that have not progressed far in the project pipeline amid Brexit-incurred policy uncertainty.
|e/f = BMI estimate/forecast. Source: EIA, national sources, BMI|
|Generation, Non-Hydropower Renewables, TWh||77.306||82.178||85.170||92.910||96.015||98.252||100.402|
|Generation, Non-Hydropower Renewables, % y-o-y||31.670||6.302||3.641||9.087||3.343||2.330||2.187|
|Capacity, Non-Hydroelectric Renewables, MW||29,210.1||31,703.1||33,364.2||35,986.2||37,060.3||38,038.2||38,902.3|
|Capacity, Non-Hydroelectric Renewables, % y-o-y||25.2||8.5||5.2||7.9||3.0||2.6||2.3|
Latest Updates And Structural Trends
On October 18, the UK's National Audit Office announced that it expected the UK to overshoot its spending cap for renewables subsidies by GBP1.7bn for 2020/2021 - with total cost set to hit GBP8.7bn. While this is GBP400mn lower than initial forecasts, we continue to expect such cost overruns to cement the austerity strategy that has been advocated by the Conservative majority government that has been in power since May 2015.
The UK voted to leave the European Union on June 23 2016. We do not expect this to have a significant impact on our 10-year forecast for UK's non-hydropower renewables sector. This will be the result of the punitive cross-sector subsidy cuts that have been implemented over the last year under the Conservative government. These cuts prompted us to already take a downbeat view on the UK renewables sector. Similarly, we continue to expect strong government support for the offshore wind sector amid tightening power supply margins over the coming decade.
On March 16 2016, UK Chancellor of the Exchequer George Osborne announced the budget for 2016 - which entailed significant cost reduction targets for offshore wind between 2021 and 2026. The budget also earmarked funding for a total of 4GW over this timeframe, which entails that a maximum of 660MW of offshore capacity will be supported annually.
Our expectation that growth rates in the UK non-hydropower renewables segment will be markedly slower compared to those of the previous decade remains relevant in a post-Brexit UK. We attribute this view to a deteriorating regulatory environment for the segment under the current Conservative Party majority government over 2015, which has been in line with its more austere renewables policy. As such, we maintain our forecast that non-hydropower renewables power capacity will grow by an annual average of 3.3% between 2017 and 2025, in contrast to the 22.8% registered between 2006 and 2016 (albeit this was from a lower base).
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.