Ahead of the UK Government’s Energy Security Day tomorrow, RenewableUK’s chief executive Dan McGrail (pictured) has sent a letter to Prime Minster Rishi Sunak setting out measures which the government could take to stimulate green economic growth.
The letter states that there has been a range of unhelpful interventions from government in recent months, coupled with ambitious new reform packages from other countries to attract investment in clean energy.
It continues: “Taken together, these circumstances mean that government will not achieve its ambitions for the sector.
“Without new measures, the UK risks not only losing the future jobs and investment in technologies like offshore wind, but it may also sleepwalk into a crisis that imperils the socio-economic benefits the sector has delivered to date.”
McGrail points out that the cost of building renewable energy projects has increased due to inflation, interest rate hikes by central banks and the rising costs of raw materials – and that current instability in the financial sector will increase the costs of capital and borrowing even further.
This puts huge financial pressure on projects and squeezes UK-based supply chain companies by reducing demand for their products and services, he argues.
The letter adds that: “The narrow perspective on keeping bills low by driving unsustainable prices for our cheapest form of electricity generation will impede the delivery of the lowest cost electricity system, hurt the public through negative impacts on good-quality jobs in coastal communities and reduce investment flowing into the UK.”
RenewableUK’s chief executive contrasts the lack of action by the UK Government with the pro-active stance taken by the country’s main competitors.
The EU has published its Green Deal Industrial Plan with targeted support for renewable technologies and supply chains, flexible state aid rules and a streamlined regulatory framework.
The USA’s Inflation Reduction Act offers easy-to-navigate tax breaks and subsidies to clean energy investors worth nearly $500bn.
McGrail warns that “intensifying global competition for renewables investment, supply chains and skills means that we cannot keep relying on the toolbox that got the sector where it is today – we need to innovate and outsmart our competitors”.
McGrail expresses hope that this week’s Energy Security Day will include a much-needed set of joined-up measures to respond to the bold investment packages which our competitors have put forward.
He highlights the urgent need to create a stable business environment and restore confidence for investors in renewable energy, with targeted fiscal incentives which go beyond those already announced.
In addition, he points out that changes to Capital Allowances announced in the Spring Budget only last for three years, whereas the EU and USA are offering 10-year frameworks for their tax credits, offering greater long-term certainty for infrastructure investors.
McGrail also urges Sunak to reform the cumbersome planning system and speed up the slow pace of grid development.
He recommends giving the regulator Ofgem a new mandate which puts net zero at the heart of its decision-making process to enable vital new grid infrastructure to be installed faster.