From a finance and funding perspective, the message from All Energy was, overall, positive. The main takeaway for me was that further investment is ready and waiting, subject only in some cases to commitments from policy makers.
The recently announced offshore sector deal could be the catalyst the industry needs in terms of achieving updates to the transmission network, continued CfD support and so forth to allow further growth and investment. The industry has delivered so much progress in the offshore sector over recent years, perhaps most notably with significant cost reductions allowing a £57.50 mw/h power price on the Moray East project.
It’s now over to the policy makers to help industry players to deliver further progress and to encourage funders and equity backers to invest. Continued CfD rounds, site availability and consistent regulation all have a part to play in allowing developers, suppliers and funders to build up pipelines and invest with confidence.
The same could to some extent be said of the onshore wind sector: We should not allow the fact that the onshore sector is already a success story allow us to become complacent – there are more investors still willing to enter the market, or to come out of hibernation, with the right encouragement. Further CfD or other subsidy support such as a floor mechanism would likely be welcomed by the onshore sector but absent that, perhaps the strongest message here needs to be directed towards the planners.
If government policy dictates that subsidy free is the route forward for onshore wind, then it would greatly assist the sector if projects can be built which are more easily capable of being modelled on a subsidy free basis. Allowing higher tip heights would play its part here, as would increased planning terms. If projects are limited to 25 year planning consents, it becomes harder to model investment-worthy returns on a subsidy free basis. Lengthen the term a project can be modelled over and the market should open up.
We look set to see continued funder, equity and government support for offshore wind which can only be a positive thing. It would be wonderful if the onshore sector could benefit from this momentum too.
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