Without additional investment and policy support, the UK will fall short of its net zero ambition according to a new report from the Association for Renewable Energy and Clean Technology (REA).
While the renewable energy and clean technology sector is resilient and offers great scope for decarbonisation the association noted in its annual state of the industry report, REview21, it is being stifled by a lack of consistent, proactive and long-term support from the government.
“The same goes for employment,” continued Dr Nina Skorupska CBE, CEO of the REA. “Again, we have seen decent progress, with nearly 140,000 people now being employed by the renewable energy and clean tech industry and we believe that nearly 200,000 extra jobs could be created by 2035.
“This figure might be even greater if the government properly backs our sector and puts the industry at the heart of the UK’s economic recovery. By the same token, these job projections aren’t a guarantee either.
"If the sector continues to receive patchy and short-term support from the government then we could fall well short of our sector’s, and, indeed, the country’s economic potential. We need these new jobs to be fairly distributed across every region and country that makes up the United Kingdom too.”
Renewables: generation continues to surge
In 2019, 12.3% of the UK’s energy consumption came from renewable sources, it shows. While this shows continued growth, it suggests the country is likely to miss its 15% target by 2020 set out in the Renewable Energy Directive in 2009.
The power sector continued to be the main driver of this transition to renewable sources, with 34.85% of its energy coming from renewables, up from 31.07% in 2018.
Of this, onshore wind was the largest contributor to this while offshore wind grew the most dramatically, increasing by 20% over the course of the year. Collectively, wind accounted for more than half (53%) of all renewable power generation in the UK.
Biomass power was the next largest producer of renewable energy, growing 9.2% on 2018 levels to generate more than 25,000GWh across 2019.
Hydro similarly continued to grow, jumping 9% on the previous year to generate nearly 6,000GWh across 2019. Shoreline wave and tidal generation made little progress however with just 1GWh of power in 2019.
Solar PV generation grew by 2% between 2018 and 2019, but this was actually down from 2.45% in the previous year. The REA noted that this reflects a general trend of a slower growth rate from 2016 due to cuts in policy support, most notably the closure of the Renewable Obligation and the feed-in tariff schemes.
Generation from the technology was still around five times greater in 2019 than the UK National Renewable Energy Action Plan (NREAP) 2020 projection, producing more than 20% of all power in the UK.
With the continued emergence of the subsidy free market, the UK’s solar sector appears to again be picking up pace. In the 12 months to 21 March 2021, 660MW of new PV was installed, and there is now in excess of 15GW in the pipeline, research from Current± publisher Solar Media earlier this year found.
To enable further renewables to come onto the UK’s grid going forwards the REA has called for six monthly Contracts for Difference (CfD) auctions with a clear rolling timetable and sufficient budgeting, as well as new support for small scale projects and the removal of VAT on domestic installations. This follows the suggestion from the Treasury recently that it will not be changing the VAT levels on ‘green products’ such as solar panels and heat pumps despite repeated calls from the industry to use such a change to drive growth.
Additionally, the UK should work to develop deep, transparent flexibility markets REview21 continued. Support should be provided for all technologies including bioenergy, which the REA say has a “vital value” the government must recognise, and innovation funding reformed to enable more renewable and clean technologies to benefit from it.
The grid must also be reformed to ensure an efficient grid network that favours renewables and clean tech continues to aid growth. The Grid Code review launched yesterday as part of a slew of governmental calls for evidence will contribute to this. Finally, an explicit, understood Decarbonisation Priority should be incorporated into Ofgem’s KPIs and activities.
Heating: little movement from heat pumps and solar thermal
Despite a small rise in 2019, the installation of heat pumps has been largely stagnant since it jumped in 2015 in line with the Domestic Renewable Heat Incentive’s introduction. As such it was far below BEIS’s NREAP projects, with the REA expecting it to meet just 45% of the government’s estimate.
Over the last year, there have been increasing calls for the decarbonisation of heat to become a priority in the UK. In response, in Prime Minister Boris Johnson’s Ten Point Plan released in November 2020, he set out a goal of 600,000 heat pumps being installed every year by 2028.
However, the calls for action again grew with the closure of the Green Homes Grant – a scheme designed to support the installation of energy efficiency measures as well as technologies like heat pumps and solar thermal – after just six months.
This decision was widely condemned, with the Environmental Audit Committee for example stating that “actions speak louder than words”.
Solar thermal also saw just a small rise in heat generation in 2019, producing just 7GWh more than it had in 2018. Overall, it generated 620GWh, representing just a small element of the renewable heat sector.
Instead the sector was dominated by bioenergy sources, which accounted for 79.9% of total renewable heat generation in 2019. Deep geothermal saw no change over the past 14 years, but there is hope that this is set to change within the next year or two, with the REA calling for further governmental support of the technology.
At the beginning of July, Geothermal Engineering announced plans for four 5MWe geothermal power plants in Cornwall following the success of its proof of concept power plant on the United Downs Industrial Estate in the county.
The REA is calling for a coordinated, long-term policy framework to enable the decarbonisation of heat in the UK. It should support all renewable technologies, and work to close policy gaps for business and industry. This should include tariff support for the replacement of fossil fuels, funded CfDs for industrial heat decarbonisation and tax benefits.
Additionally, a clear strategy and policy framework to support the mass deployment of low carbon hydrogen should be brought in.
Transport: impressive progress as EVs go from strength to strength
According to the REA, impressive progress has been made recently to decarbonise the transport sector, thanks in part to the growth of the electric vehicle (EV) and hybrid market.
The transport sector accounted for 34% of all carbon dioxide emissions in 2019, of which 91% came from road transport vehicles. Within this segment, cars accounted for 55%.
Ahead of the upcoming ban on the sale of new internal combustion engine vehicles in 2030, the growth in EVs is already being seen. Between 2019 and 2020, the market share of new car registrations for EVs and hybrid cars rose from 3.17% to 10.56% the REA said.
The market for EVs has been expanding at pace, jumping from a growth rate of 17.41% between 2017 and 2018, to 134.97% growth in 2019 to 2020. However, the market share for hybrids has shrunk repeatedly over the last five years, varying widely over that time.
While the overall growth in EVs is encouraging, more needs to be done to equip the UK with a strategic rapid charge network and home and destination chargers. Also, improvement in interoperability of EV charging infrastructure should be supported by policy developments.
The number of chargepoints grew by 43% between 2018 and 2019 though, and again by 74% the following year. Between 2020 and 2021, it has grown by a further 23%, the association found.
These are distributed fairly evenly between slow, fast and rapid chargers, making up 25%, 50% and 25% of the market share respectively in 2019, 2020 and 2021 respectively.
As well as growth in EVs, emissions from the transport sector were lowered thanks to the increasing consumption of renewable transport fuels, which grew by 27.3% from 2018 to 2019.
Overall, the government should look to offer long-term support by maintaining adequate grant funding to overcome areas of market failure, supporting local authorities to improve charging infrastructure networks.
Employment: favourable policy could see jobs double by 2035
Together with Innovas, the REA put together employment figures for the renewable industry as part of the finance chapter of the REview21 report. They found that for the financial year 2018/2019, there were 133,977 people employed in the sector, while in 2019/2020 there were 138,264 people employed. This is an increase of 3.2% from 2018/2019.
Going forwards, the REA forecasts that there could be 222,000 jobs in the renewable energy and clean technologies sector by 2035, more than double employment figures for 2019/2020. This growth however relies on a favourable policy environment.
The market value of the renewable energy sector has continued to grow, jumping 9.6% to £20.6 billion in 2018/2019, and then again by 8.7% to £22.4 billion in 2019/2020.
While detailed analysis of the following year is not yet available the REA noted, the early figures indicate the impact of COVID-19 saw a large decrease in new installations being built and commissioned both due to lockdowns leading to restricted access, and the impact of the international shipping crisis.
The number of active renewable energy companies has again grown, but only by a very small number. From 2018/2019 to 2019/2020, there were 34 more companies, or a 0.5% growth. This brings the total up to 6,718 active companies in the sector, a number that reflects the reduction in policy support for solar and onshore wind in recent years putting off growth.
Further support is required around the country to maximise on the opportunities green energy growth provides for job creation the REA adds. This lends its weight to a recent call to action from the Green Jobs Taskforce amongst others, which asked the UK government to support the ambition to create two million skilled jobs by 2030.
“If the government is serious about reaching their net zero ambitions, and about ‘levelling up’, they need to back our sector, remove the barriers preventing the growth of our technologies and help us deliver new jobs and investment,” Skorupska said. “2021, the year the UK is hosting COP26, must be a watershed moment. The time for rhetoric is over, we need to see action.”