EY: UK sixth most attractive country for renewable energy

EY’s Renewable Energy Country Attractiveness Index (RECAI) has placed the UK in the sixth spot for renewable energy, a rise of one place since the last biannual report.

Driven by the Government’s decision to include onshore wind and solar energy projects in next year’s auction, the UK now stands just behind Germany and Australia, whilst the top three places are, in order the US (up one) China (down one) and France (up one).

The Government’s inclusion of onshore wind projects followed the Government programme to reach zero emissions by 2050, although the impact, for good for ill, of the pandemic has yet to be seen.

However, whilst the crisis has severely affected global energy demand, global supply chains and capital markets, EY believes the renewable energy sector will prove resilient, and in the UK a combination of technology evolution, changing patterns of supply and demand and, crucially, these policy decisions will support and gradually increase wholesale power prices over the next three decades.

The EY GB power market model forecasts that the combination will deliver a power price increase from between around £40/MWh and £55/MWh by 2025 to between around £35/ MWh and £70/MWh by 2050, in real 2020 terms. This price should support the UK’s decarbonisation, while incentivising and compensating sufficient low-carbon generation, and, at the same time, provide a clear incentive for corporate energy buyers to lock in forward power prices through PPAs.

EY also expects technological development to be complemented by supportive policy to grow markets, such as through investment in EV charging infrastructure or a network for transporting hydrogen. The deployment of carbon capture and storage (CCS), assisted by Government, could also constitute a low-carbon source of power that helps stabilise power price as it seeks to recover its fuel costs when generating. The Government’s 2020 budget included an £800mn CCS infrastructure fund. This, combined with increasing opportunities for re-use of UK carbon storage infrastructure and depleted aquifers, plus a rising carbon price, could help boost investment in CCS technology in future.

Full report here.

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