FINANCE AFFORDABLE FINANCE WILL BOOST DEPLOYMENT AND REDUCE COSTS
Both the availability and affordability of finance will be key enablers in delivering the UK’s 2020 renewable energy target. London is a world-leading financial centre so we are well placed to develop innovative financial products that will not only drive down the cost of capital to the renewables sector but also the cost of deployment and ultimately the cost of energy produced from renewable sources.
PwC estimates that there has been £29.8 billion of investment in the renewables sector during the period 2010-2013, with most of the investment in renewable electricity (£27.7 billion). In the renewable electricity sector, investment has mainly been focused on wind, solar PV and biomass. In the renewable heat sector, there was an estimated £1.4 billion invested during 2010-2012. The majority of this investment (£0.8 billion) was in bioenergy technologies, which also saw the largest amount of added capacity. Of relevance too, solar thermal and heat pumps saw an estimated combined investment of £0.6 billion over the period, delivering 530MW of capacity.
There has been comparatively little investment in renewable transport fuel production in recent years. During 2010 to 2013 PwC estimate that a total of £0.7 billion was invested in UK biorefineries.
For the period 2014 to 2020 PwC estimates that an additional £64.4 billion of investment will be required in both renewable electricity and heat to meet the UK’s 2020 target. Of this, £40.8 billion of investment will be required for renewable electricity.
To attract this investment it is essential that the financial community is reassured that the renewable energy sector will continue to grow up to and beyond 2020. Above all else, policy stability and ambition must be at the heart of the new Government’s agenda.
MANIFESTO ASKS
• Stable and transparent policies will attract a wider spectrum of investors thus improving competitiveness and driving down risk premium
• Simplification of policies will incur lower upfront costs thus reducing the cost of finance
• Clarity of key policies - the finance sector needs to know whether CFDs, RHI and FITs will be investable in the medium to longer term
• A 2030 renewables target will help prevent a hiatus and ensure the finance sector continues to see the renewables sector as having a viable future
• Reconsider the transition timetable from ROC’s to CfDs to avoid bottlenecking of projects in the run-up to March 2017
• Government to work closely with the finance sector to improve understanding and improve policy
• Government departments to speak with one voice on renewables issues
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