Is it all over for the renewables market?
As you may have seen, since the election, the government has introduced some tough policy changes in the renewable energy sector. We firstly saw significant changes to planning policy putting more emphasis on the local community engagement (not a bad thing) and latterly, a proposed significant cut in the incentive structures. So does this mean the end of the road for renewables?
At present, the tariffs for renewable heat are still encouraging investment and new projects, particularly ground source heat generation. This is financially viable and worth considering if you have a demand for heat within your business. Whilst biomass has seen a reduction in tariff, there is still uptake due to the ability to grow your own biomass, low day to day running cost and the practicality ie if you install a biomass boiler on a poultry unit for example; it is easily interchangeable with a gas or oil system in case of breakdown or expense of operation.
Ground source is interesting, uptake to date has been low probably because there is little experience and it requires more technical input so there are not as many cowboy operators. It’s particularly good if you have electric generation on site as well but just be careful of the infrastructure (particularly pipework) required in the ground, which maybe ok if you’re on a new building site but not suitable in confined areas.
As to solar, hydro and wind, the outlook is bleak. Wind energy generation may be viable but only in areas with cheap grid connection and a very good wind speed. Just as with the solar market, I doubt that we will see any significant reduction in the system capital cost and with the energy wholesale price on the floor at the moment, the financial model does not make sense and certainly not viable from a lending perspective. Solar will only work if there is a significant drop in panel prices and a constant demand for the power on site. What worries me is the smaller manufacturers will start to shut up shop putting warranties in jeopardy or seeking additional cost in maintenance agreements to cover their loss of profit from new sales.
Where next then? Storage has to be the way forward. Our government should follow our European partners and incentivise and invest in electrical storage. Storage would allow us to match generation with demand and deliver it when needed rather than having to cover for that ‘what if?’ scenario which is costly and wasteful.
From my point of view, I’ve employed many people directly as a result of renewables and seen many businesses grow from nothing to employing many hundreds of people, kick starting a very vibrant new sector. I will be sorry to see those individuals that have studied and gained experience in the sector suddenly find that the jobs and work have dried up; they are often the ones forgotten in the party politics and vote winning.