Friday, 4 March 2016

Inspiring confidence

The Government has recently made a number of decisions regarding energy, ranging from conflicting with national priorities to those which are just plain confusing. The slashing of the solar PV Feed in Tariff is a prime example. It is important that renewable energy technologies are economically viable in the marketplace, and not seen as an unsustainable money pit, so the goal of eventually weaning new technologies off subsidies is a sensible market objective. 

However, there is also danger involved in this process, as removing them too soon and too quickly leads to a ‘cliff edge’ situation and if investors don’t have some assurances over what lies beyond it could cripple the renewables market. 

CIBSE has warned the Government against this risk in the past, and now the House of Commons Energy and Climate Change Committee has echoed these concerns in its report ‘Investor confidence in the UK energy sector’. Among their criticisms, inconsistent and contradictory policy featured highly, as did a lack of decision-making transparency and consideration for investors. 

MPs address CIBSE on sustainability
Such has been the impact of the Feed in Tariff that it has attracted significant public investment, both in terms of money and skills. Workers throughout the supply chain for renewable technology have shifted their focus towards skills that allow them to work on PV projects. Infrastructure has been set up to supply the needs of the work that the tariff has created, from manufacturing to maintenance, often by entrepreneurial SMEs. The changes to the tariff already have and will continue to jeopardise the value from subsidies already paid since the scheme was set up. 

Beyond the impact on this one renewable energy scheme, the Government’s attitude risks being seen as symptomatic of its attitude to the entire industry. In an environment where confidence is a prized commodity, a perceived lack of commitment by the Government is a severe blow to anyone who may have been considering investing in a low-carbon technology. For energy projects that can take years or even decades to go from inception to completion, this is a potentially devastating blow from which it could take the sector many years to recover, and meanwhile the accumulated skills of the industry are going to waste.

Those investors are going to remain reluctant to spend on projects that will come on line ten years hence, a particular risk for renewable schemes that rely on new infrastructure and technology, when they have no idea what the legislative landscape will look like in the future. Constant changes to Government legislation in the area mean investors can’t budget for subsidies, tax rates, support for skills or manufacturing; this puts them off investing in renewables, and worse, may drive them towards more familiar projects involving polluting fossil fuels.

New energy infrastructure can take decades to develop
If the Government hopes to make renewables a large part of its plan to increase energy security and cut the UK’s carbon footprint, a long-term view needs to be taken. The nature of the industry and its funding need to be given priority over short-term policy changes that undermine confidence in the industry, and mixed messages that confuse industry and consumers alike. The UK should be aiming to be the most attractive country in the world for investors in renewables, but investors can’t be expected to put their money and skills on the line if the Government doesn’t appear to share their convictions.

By Matt Snowden, CIBSE Blog Editor

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