A worrying time for sustainable energy

Sarah Butler-Sloss

Wednesday, 06 April 2016

It has been a turbulent time for those working in sustainable energy in the UK with a raft of policy changes having a major impact on businesses, social enterprises and charities in the sector. Job security and loss of growth have become serious cause for concern.

As an Awards scheme, Ashden uncovers and rewards, supports and promotes the people and organisations from across the UK and the developing world that are pioneering sustainable energy solutions which bring social, economic and environmental benefits.  Through our work we bring together the UK’s leading practitioners in areas including energy generation, renewable technologies, fuel poverty, community energy and education, so as to provide a clear voice for the industry.

Alarmed by reports that we were receiving from our UK Award winners about the consequences of the policy changes that have been introduced since the last general election, we undertook a survey of some of the leading practitioners in the sustainable energy industry.  The results – published in FiT for the 21st century? A survey of the impact of recent UK policy changes on the sustainable energy sector – do not make for comfortable reading.

After at least 14 policy changes in the last six months of 2015, many of our Award winners – past and present – are anticipating an “annus horribilis” ahead, predicting a loss of sales, jobs and economic security.  The majority reported that they are preparing for loss of growth and investment this year.

The organisations surveyed represent a broad spectrum, from small start-ups to multi-million pound businesses, all working to accelerate the transition to a low carbon economy.

Nearly 50% stated that there have been or will be redundancies within their organisation.  One in two said that they are reviewing their business model, including moving away from electricity generation and looking to Europe for business.

As one of the organisations put it: “You think you are travelling in a certain direction having spent years laying down the ground work in the industry and then overnight these rails are ripped up. Time to take stock.”

It’s clear that neither businesses nor investors can plan for the future if a government is to change policy in such an abrupt manner, a fact underlined by the UK dropping from 8th to 11th place in Ernst & Young’s Renewable Energy Country Attractiveness Index. The UK was once a pioneer in the sector, but David Cameron’s fine words at the UN climate talks in Paris last December are starting to ring very hollow indeed.

Our EU target to reach 15% of energy consumption by 2020 from renewable sources looks increasingly out of reach, especially as the policy environment surrounding heat and transport is looking decidedly unambitious. In 2014, 7% of the UK’s total energy consumption came from renewable sources, showing the scale of the task we have to complete in the next five years.

It’s not just practitioners in the sustainable energy sector who are on edge but investors too.  According to Paul Simon, Special Adviser to select Sainsbury Family Charitable Trusts on their investing strategies, and also an Ashden Trustee: “In light of the changing regulation in the UK and the negative knock-on effects on the attractiveness of investing in renewable energy, we have shifted our allocation priorities away from the UK. We are now focused on the emerging markets and North America. Sadly, we will likely see a considerable divergence of capital away from the UK renewable energy sector to other markets offering greater policy consistency and more attractive investment opportunities.”

As well as listing all the policy changes that have come into effect since June last year, FiT for the 21st Century? includes specific recommendations made by our Award winners such as the need for the government to:

  • clarify the details of and confirm the timetable for the next round of Contract for Difference auctions
  • taper the Feed-in Tariffs more slowly to allow the renewables industry to reach subsidy-free electricity generation as soon as possible
  • encourage and facilitate Power Purchase Agreements
  • learn from the low cost finance model pioneered by the German government-owned bank KfW
  • introduce new policies and strengthen existing ones for home energy efficiency
  • set out a clear, long-term timetable for the UK’s energy policy to reignite confidence and investment in the industry.

In order to contribute towards the COP21 aim of limiting long-term global warming to 1.5°C over the coming decades we need to focus on moving to renewable electricity generation and heating as well as transitioning to electric vehicles. According to our research, growing the renewable sector in the UK could have created 400,000 new jobs over the next five years. However, policy changes to date have resulted in more than 4000 job losses already, with a further 40,000 at risk.

If we truly want to be fit for the 21st century, what’s needed are more ambitious schemes to help proven technologies and business models scale up, not less. Ashden Award winners represent such technologies and models, and they have told us how damaging and negative the past six months have been – it is essential that the next six months show support for the sector if the UK is to hit its 2020 energy targets.

Download a copy of FiT for the 21st century?  A survey of the impact of recent UK policy changes on the sustainable energy sector.

 

Sarah Butler-Sloss is the Founder Director of Ashden, a charity that rewards, supports and promotes sustainable energy leaders in the UK and developing and emerging economies. www.ashden.org

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