As we begin 2024, Steven Jeffers describes his top 3 pointers which suggest that a rapid scale up of renewables might be on the horizon for the UK. Have a read below:
Buoyant UK Manufacturing
UK manufacturing has come through some tough times with covid, energy price highs and supply chain issues, but all the evidence is there that there is huge promise and solid growth in the sector. The Automotive, Aerospace and Chemical industries in particular, have all got great news stories from 2023, with significant investment coming into all 3 of these verticals - and the investment is aligned to Net Zero transition as well. Construction and expansion of EV battery and vehicle production is on the rise and clean fuel production such as H2 is also rising. This is providing a solid base and great opportunity to invest in renewables, make hay or power when the sun shines!
With UK manufacturing on the up, our exported volume will naturally decrease and for UK exporters (of certain products to start with), the European introduction of CBAM (Carbon Border Adjustment Mechanism) will encourage further the decarbonisation of their products. Essentially it will be harder to sell products with higher carbon intensity into EU states as there will be an additional price for the embedded carbon of the product via certificates needed to be purchased to account for the embedded carbon.
COP28
I am a bit of a cynic when it comes to COP these days and am generally underwhelmed by the outcomes but I feel this is currently not the platform for big promises or pledges that are not met, rather it is to gain consensus on the actual problem itself. Yes, it is important to have some actionable outcomes which there were, but my general takeaway from this year is that I feel the jungle drums are being listened to and I believe the vast majority is pointing in the right and same direction. It now appears that there is a consensus on the problem, the scale of the problem and the pace of the problem that needs to be tackled. I don't think this has been the case previously, hence the slower than desired progress to date.
It was only a couple of years ago that there was a drive on keeping global warming to below 1.5 degrees, even though the evidence was there then that this was highly unlikely. This year there has been genuine recognition that 1.5 degrees will not only happen but it will happen a lot sooner than previously thought. Once there is recognition and a true understanding of the problem, we can start to scale up on the solutions.
Tripling Renewable Generation
At number 3, of course, is the various pledges of tripling renewable generation. Clearly close to my heart but this should be a no brainer for any organisation and should be business as usual when it comes to Net Zero. However up until now unfortunately, for most organisations this hasn't been the case. Behind the meter solutions offer huge potential for this to scale up quickly, the business case is there and the businesses I am working with are moving in the right direction!
The planning regulations have been promised to be relaxed to help scale up, which in turn will make businesses make decisions quicker. I hope a change of government will actually help see this through as I see it as the number one blocker to scaling up. In addition to removing barriers such as planning, I feel a little extra encouragement policy would be ideal. All of the business cases I put forward to UK manufacturing clients are a straight forward comparison between grid energy and renewable energy with no Government incentives to opt for renewable. I think a small change here would deliver big results.
The previous round of Contracts for Difference (CfDs) was nothing short of a disaster but at least we learned from it, with a now reasonable strike price in the latest round that will encourage investment into renewables. UK manufacturing should be investing in their own renewable generation and not rely on grid decarbonisation. But it's not possible to meet demand from this alone - having an abundance of renewables from offshore and onshore wind that industry can tap into in the form of CPPAs and ultimately grid purchasing is imperative.
What does this mean?
In short, the UK industry is in a great position to benefit from investing in renewables and those who are part of the Net Zero Transition are leading the way. The business cases are solid and policy is backing that up, although more encouragement would be nice... Let's scale up!
Steven Jeffers, Commercial Director