PwC RENEWABLE ENERGY VIEW 2015
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and foundations per MW or capacity as have been seen in offshore projects. The assumed capex factor applied to onshore wind has remained flat from 2013.
3.2. Capacity deployment DECC publishes data tracking the deployment of renewable electricity generating capacity by technology type. Figure 9 shows the growth of capacity in the UK, which reached 24.2GW at the end of 2014 (2013: 19.7GW), following record capacity additions of 4.5GW during 2014, equivalent to 23% growth in a single year.
Figure 10 shows the capacity deployment
during 2014 by technology. Two technologies stand out for their outperformance against previous forecasts: solar PV and offshore wind. Solar PV has not only deployed significantly more capacity in 2014 than onshore and offshore wind combined, but also more than doubled the 2013 solar PV capacity addition of 1GW. Offshore wind, while reaching a lower absolute deployment, exceeds the existing forecasts by c. 60%.
This shift in the mix of capacity being
deployed is significant because it affects the output of renewable electricity, since all technologies have different load factors.13 Solar PV has one of the lowest load factors of any renewable power generating technology (c. 10%), meaning that a large addition of solar capacity will not lead to as large an increase in output as would be the case from other technologies.
State of the Renewable Industry
for biomass, with Drax’s Unit II conversion unit entering operations, adding to the unit commissioned in 2013.14
FIDe contract awarded to MGT’s 300MW Combined Heat and Power (CHP) plant
3.2. Capacity deployment In January 2015 the
The last 12 months have also been positive
in Teesside formally cleared EU state aid approval.15
This marked the first biomass
plant to be approved under the CfD regime. Another important observation is the extent to which the total capacity additions exceeded the forecasts made by DECC in 2013. The outturn capacity additions amounted to 129% of the 2013 forecast for 2014.
DECC publishes data tracking the deployment of renewable electricity generating capacity by technology type. The figure below shows the growth of capacity in the UK, which reached 24.2GWat the end of 2014 (2013: 19.7GW), following record capacity additions of 4.5GWduring 2015, equivalent to 23%growth in a single year.
3.3. Renewable electricity investments in 2014 In order to estimate cost of deploying this capacity the technology specific capital costs in a given year is multiplied by the capacity addition. 2014 saw the greatest investment in renewable electricity capacity to date, with the in-year investment of £9.8bn (2013: £9.1bn) taking the total since 2010 to £36.3bn. Solar PV attracted the greatest investment during 2014 (£4.6bn), followed by offshore (£2.1bn) and onshore wind (£1.4bn). Mixed waste-to-energy showed the greatest year on year increase, with investment rising almost six-fold to £0.8bn in 2014. This level of investment has translated to greater than expected capacity additions during the year. When compared to 2013 forecasts made by DECC, the 2014 out turn capacity additions have exceeded expectations by 1GW (c. 30% greater in year deployment than 2013 forecast). The capacity outperformance during 2014 has come primarily from the two technologies: solar photovoltaics (1GW or c.75% above forecasts) and offshore wind (0.3GW or 75% above forecast). The reason for this outperformance is considered to be partly due to be an effort by solar and offshore wind industries to
Figure 9: Cumulative deployment of renewable electricity capacity (GW)10 24.2
25 20 15.5 15 12.2 10 5 - 2010 2011 2012 2013 2014 84 REview Renewable Energy View 2015
The figure below shows the capacity deployment during 2014 by technology. Two technologies stand out for their outperformance against previous forecasts: solar PV and offshore wind. Solar PV has not only deployed significantlymore capacity in 2014 than onshore and offshore wind combined, but alsomore than doubled the 2013 solar PV capacity addition of 1GW. Offshore wind, while reaching a lower absolute deployment, exceeds the existing forecasts by c. 60%.
9.2 19.7
Tidal and wave Solar Onshore Wind Offshore Wind Mixed Waste-to-Energy Hydro Biomass power Anaerobic digestion
FIGURE 9 CUMULATIVE DEPLOYMENT OF RENEWABLE ELECTRICITY CAPACITY (GW)11
commission projects under the existing support mechanism, before these close to new capacity.
The headline change anticipated by
developers is the closure of the RO to all capacity in April 2017. Although support will continue to be available under the CfD regime, the risk profile of the CfD mechanism is fundamentally different due to the competitive auction process, which introduces allocation risk to developments. By commissioning projects ahead of 2017 under the RO, developers are guaranteed regulatory support (subject to no further ROC re- banding) for the full ‘grandfathering’ period or 20 years from COD, without the risk of failing to secure a CfD. Although the RO regime will remain
open for new capacity until 2017, DECC has taken steps to limit the volume of large (>5MW) solar PV technology able to access support under the RO from April 2015. The amendment reflects the more aggressive deployment of large scale solar and DECC’s concern about the impact this has on the LCF budget. The announcement is credited with leading to a push by developers to commission projects before the April 2015 deadline; as with wind, this is seen as a lower risk option than attempting to secure a CfD at auction.
This change in policy is an example of policy change in response to a maturing renewable market, where Government is attempting to maintain support for a wide range of renewable electricity generating technologies.
Investment in Renewables
Onshore wind attracted an impressive £1.4bn during 2014, with a strong pipeline of projects in development (1.3GW in construction, 5.2GW consented and 5.7GW
www.r-e-a.net
Capacity (GW)
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