Renewable energy in Wales has the potential to boost the local economy and help meet climate goals, but access to project finance is a barrier to development, according to a report by the Institute of Welsh Affairs (IWA).
The report – ‘Funding Renewable Energy Projects in Wales’ – said “significant numbers of potential renewable energy projects in Wales have struggled to go ahead and obtain sufficient funding due to cuts in subsidies and other factors”.
Projects have also struggled or not attempted to attract Welsh capital funding, which has then seen profits flowing outside Wales, IWA said.
It added that money is available, such as local government pension funds that have a collective investment of £13bn.
“A significant proportion of this £13bn is invested outside of Wales and not directly in Welsh assets,” the report said.
It added that a lack of ambition and of strategy is also currently holding back investment in Wales.
The report said the Welsh government could provide “levers … to stimulate investment, including powers over business rates relief for example which could drive community participation in renewable energy schemes”.
However, currently levers to stimulate investment are controlled by the UK government, including renewable energy subsidy setting.
The report calls for the Welsh government, in the short term, to lobby the UK government to ensure that subsidies are more favourable than they currently are to renewable energy technology types suitable to Wales.
In the long term, there is a need to devolve a range of powers over renewable energy subsidy setting to Wales, so that Welsh schemes are not susceptible to UK government policy and subsidy changes, it added.
IWA project coordinator for the ‘Re-Energising Wales’ project Shea Buckland-Jones said: “This report sets out an important overview of some of the barriers to investment in renewable projects, but more importantly a range of opportunities and investment options that could help raise financial capital from within Wales to support renewable energy projects.
“Wales needs to reach its renewable energy potential by taking advantage of its ‘abundance of natural resources’ and should do so by investing in a way that ensures wider economic and social benefits are retained locally within Wales.
“Welsh government, pension funds, local government, private sector and third sector organisations all have important roles to play in this and joined up thinking is required to make it happen.”
Image: Wear Point wind farm in Wales (Infinergy)
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