In light of David Cameron’s announcement this week to review the Government’s green energy subsidies as it struggles to cut energy bills, alongside the Labour Party’s plans for a retail energy price freeze, it is no surprise that general public opinion around the energy sector is becoming increasingly strained.
The Financial Times revealed on Monday that “officials and ministers are examining at least three programmes with a view to reigning back costs: the Energy Companies Obligation (EOC) subsidy, the carbon floor price and renewable obligation certificates”. A plan to reconsider the EOC in particular, which provides insulation for lower-income households, will no doubt leave a bitter taste in the mouths of the consumer. With the ever-looming prospect of blackouts, which the Government is very quick to remind us about, the constant changes to its policy are causing an increasingly negative perception around the nation’s energy agenda. This sentiment is not limited to the consumer, and has had a significant impact on the investor community whereby investment decisions to build new energy assets are being hindered.
My personal frustration, having supported entrepreneurial start-ups and investors in the renewables sector in attracting senior talent to their organisations for many years, is that there is a tangible and genuine desire across the entire value chain of the energy industry to find an overall solution that will solve the basic challenge of balancing affordability, energy security and decarbonisation. However, the constant changes and delays to energy policy reforms are creating significant uncertainty at all levels, leaving businesses in a state of limbo as they weigh up the risks of continuing developments in this political minefield.
It is not all doom and gloom however, and I am continuously encouraged by my candidates and clients who are joining the sector due to the potential growth opportunities that it offers if we can pass these hurdles. Reassuringly, the Government is required by law to deliver circa 30% of its electricity from renewables by 2020. I am also aware of a number of investment funds that are looking beyond the political cloud, and expanding their activities into broader infrastructure funds and emerging sectors in the UK, such as solar. As the Western EU PV markets begin to level off, the UK has emerged as one of the strongest and most stable growth opportunities for solar deployment.
Furthermore, the Government has at last provided the stability and certainty that the UK needs to begin to meet the huge energy challenge facing us with its plans to generate 16GW of new nuclear power by 2025. The highly-publicised Hinkley Point will be the first of the proposed plants whose development is expected to see 25,000 jobs created over the construction period, which includes 5,600 construction opportunities plus thousands of supply chain jobs - worth £100 million a year to the local economy during the peak construction phase.
All we need now is clear Government direction to allow the general public and investor community to get behind this complex but crucial industry for our futures!
Victoria Jordan is a Consultant in the Energy, Manufacturing & Infrastructure Practice at Berwick Partners