Just four per cent of the renewable energy industry believes the UK has a ‘good’ or ‘excellent’ chance of meeting 2020 targets, a new survey by the Renewable Energy Association (REA), has found.

Under the government’s Energy Bill, 15 per cent of electrical energy is to come from renewable sources by 2020. In order for the UK to meet its goal, the bill introduced new incentives to attract low-carbon energy investment including long-term ‘contracts for difference’ (CfD) that offer generators guaranteed prices for their energy.

The ‘first ever’ industry confidence survey released today (18 March), was conducted by the REA in order to capture the outlook for the renewable industry in relation to turnover, new business and employment, and includes responses from senior managers of 68 companies.

Key Findings

According to the REA, a confidence level of ‘at least’ 75 per cent is required if the UK is to have good prospects of achieving is mandatory target of 15 per cent renewable energy by 2020. However, the survey found that there was widespread concern about the complexity and efficacy of current policy mechanisms and about the Energy Bill in particular.

Indeed, the findings not only showed that just four per cent of executives believe the UK has a ‘good’ or ‘excellent’ chance of meeting its 2020 renewable energy target, but 68 per cent have ‘poor’or ‘very poor’confidence in whether the UK will be able to achieve it.

Further, 69 per cent said they thought the lack of a decarbonisation target within the Energy Bill sends a ‘poor’ or ‘very poor’ signal to investors.

Other findings from the survey included:

• of all EU member states, the UK has to achieve the ‘most challenging growth rate’ to 2020 targets; 16 per cent year on year;
• a 47 per cent average Renewables Industry Confidence Index for the first quarter of 2013;
• 51 per cent of industry ‘active in the electricity sector’ said they had ‘poor’ or ‘very poor’ confidence that CfD will be effective in bringing forward renewables generation while 31 per cent ‘didn’t know’;
• 43 per cent said they have ‘poor’ to ‘very poor’ confidence in their ability to raise finance;
• when asked to respond to the efficacy of the key renewable energy incentive schemes, respondents said they were ‘poor’ or ‘fair’;
• the transport industry was the most confident in their associated regulatory regimes, with 23 per cent saying they thought they were ‘good’ or ‘excellent’; and
• respondents considered that the small-scale Feed-in Tariff scheme functions the best, with 72 per cent rating it ‘fair’ or ‘good’;

The report reads: ‘Work is needed by DECC to improve the industry’s confidence in the Energy Bill. The REA has been raising the problems the Energy Bill currently poses for independent generators, in particular, and for whom ministers have committed to securing a solution. The Feed-In Tariff has a relatively high level of confidence, but the Renewable Transport Fuel Obligation (RTFO) and the Renewable Heat Incentive (RHI) appear to inspire little confidence.

‘A 2030 CO2 target in the Energy Bill is seen as of major significance, and its absence is undermining confidence in investment in renewable energy and its supply chains this decade.'

REA Recommendations

The REA suggests that issues such as uncertainty about the Energy Bill, the functioning of support schemes and continuing difficulties in raising finance that are limiting the ‘necessary high levels’ of growth across the renewables sector must be addressed first in order to achieve the 16 per cent growth per annum target.

Recommendations for the government listed in the survey included:

• providing ‘consistent’ messages across government departments within the context of a ‘clear and positive vision’;
• sending out a clearer signal of its long-term objectives, for example by introducing a 2030 decarbonisation target for the power sector in 2014;
• ensuring that the CfD proposals in the Energy Bill secure investor and generator confidence for all types of investor;
• addressing concerns with the Renewable Heat Incentive by introducing viable new tariffs on time and setting a stable long term framework; and
• addressing concerns with Renewable Transport Fuels Obligation by setting a trajectory to 2020 and beyond.

‘Industry needs policy certainty and political consistency’

Speaking on the release of the survey Chief Executive of the REA, Gaynor Hartnell, said: “We will repeat this survey every six months in order to build up a comprehensive picture showing trends in confidence levels. Billions of investment needs to flow into renewables infrastructure. Our aim is to provide government and stakeholders with a tool to gauge how policies are being received.

“The UK has to achieve a higher growth rate than any other member state in order to reach its 2020 renewables target. Mixed messages remain a problem and industry needs policy certainty and political consistency. The prize is up to 400,000 jobs by 2020, economic growth and greatly improved energy security.”

Read the Renewables Industry Confidence Survey.