Investment in renewable electricity from2015 to 2020 will continue to be driven by the supportmechanisms in place, whether RO and CfD in the near termor CfD alone from2017. The figure below shows the annual investment by technology, based on the updated DECC forecast. The chart shows a total of £42.1bn investment is required in the next five years to reach the 2020 targets.
| 10 9.7 9.1
1 2 3 4 5 6 7 8 9
- 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F 2019F 2020F
This increase to capacity targets will require an additional investment of c. £9bn between 2015-20 compared to the 2013 DECC forecast.
One of the observations about investment in renewables is that it is volatile fromyear to year, as project commissioning reacts to technology specific regulatorymilestones or exclusions. A strong example for this is the dip in forecast investment in 2017, the year in which the RO is closed to new capacity.
3.5. Capital availability
This increase in capital required to deliver the updated capacity targets draws attention to the distinction between the capital required to fund developments and affordability of supportmechanisms for consumers under the LCF.
As already noted, Government will be pleased with the clearing prices of the first round CfD auctions, since these fell below the administrative prices in almost all cases. Lower strike prices allow a greater volume of renewable generation to be supported for a given budget – leading to better affordability for consumers.
a forecast of capacity split by technology, instead, only the total deployment is reported, by year. Therefore the most recent split by technology, which was published in the 2013 DECC Updated Energy Projections (UEPs), has been used as a basis for determining the generation mix, as in the 2014 report. Investment in renewable electricity from 2015 to 2020 will continue to be driven by the support mechanisms in place, whether RO and CfD in the near term or CfD alone from 2017. Figure 13 shows the annual investment by technology, based on the updated DECC forecast. The chart shows a total of £42.1bn investment is required in the next five years to reach the 2020 targets. This increase to capacity targets will require an additional investment of c. £9bn between
State of the Renewable Industry
This increase in capital required to deliver the updated capacity targets draws attention to the distinction between the capital required to fund developments and affordability of support mechanisms for consumers under the LCF.
As already noted, Government will be
Figure 14: Total investment by technolo y, 2015-20 (£bn, real 2012) FIGURE 14 TOTAL INVESTMENT BY TECHNOLOGY, 2015-20 (£bn, Real 2012)
Tidal and wave 3.5. Capital availability
2015-20 compared to the 2013 DECC forecast.
One of the observations about investment in renewables is that it is volatile from year to year, as project commissioning reacts to technology specific regulatory milestones or exclusions. A strong example for this is the dip in forecast investment in 2017, the year in which the RO is closed to new capacity.
No solar PV forecast for 2015 as 2014 saw a volume exceeding the combined 2014 and 2015 trajectory, meaning no capacity additions were assumed for this year.
pleased with the clearing prices of the first round CfD auctions, since these fell below the administrative prices in almost all cases. Lower strike prices allow a greater volume of renewable generation to be supported for a given budget – leading to better affordability for consumers. However, more affordable support for renewable generation leads to more capacity being deployed for a given support budget – leading to greater capital requirements. This need for sufficient capital is equally important if we are to meet our 2020 targets. When considering the technologies which require the greatest share of investment according to the current forecasts, we see that it is wind energy (on- and off-shore). Taken together, these two technologies are
Investment in Renewables
However,more affordable support for renewable generation leads tomore capacity being deployed for a given support budget – leading to greater capital requirements. This need for sufficient capital is equally important if we are tomeet our 2020 targets. 0.5
When considering the technologies which require the greatest share of investment according to the current forecasts, we see that it is wind energy (on- and off-shore). Taken together, these two technologies are expected to require £24bn of investment to reach the forecast 2020 capacity (57% of total investment in renewable power to 2020).
Anaerobic digestion Hydropower
Mixed Waste-to-Energy Biomass power
This report is solely for the use and benefit of Renewable Energy Association and should not be relied upon by any other party. State of the renewable industry - Investments in renewable electricity, heat and transport PwC
Off shore wind On shore wind Solar PV
1.8 1.9 3.4 4.7 5.6 11.7 12.4 20 7.6 7.9 7.2 6.0 4.9 2.9 5.7 7.8
Tidal and wave Solar PV On shore wind Off shore wind Mixed Waste-to-Energy Hydropower Biomass power Anaerobic digestion
Figure 13:Historical and forecast investment in renewable electricity 2010-2020 9.8
FIGURE 13 HISTORICAL AND FORECAST INVESTMENT IN RENEWABLE ELECTRICITY 2010-2020 BASED ON FIG 12 DATA
RENEWABLE ENERGY VIEW 2015
www.r-e-a.net
Accordingly, enabling investment in wind energy is paramount to achieving capacity targets. An interesting development in this regard during 2014 was the Green Investment Bank (GIB) investment in the 210MW Westermost Rough project. Thismarked the first time GIB was willing to take construction risk, and the bank’s involvement allowed additional investment fromMarubeni Corporation, who is also sharing construction risk. This change in approach will be welcomed by large utilities who have seen considerable pressure on their
REview Renewable Energy View 2015 87
Investment (£bn, Real 2012)
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