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UK faces headwinds amongst renewables

4C Offshore | Chloe Emanuel
By: Chloe Emanuel 14/11/2023 EY Energy

The renewable energy sector is at an inflection point, facing rising project costs, supply chain disruptions, and policy and auction design challenges, according to the latest Renewable Energy Country Attractiveness Index (RECAI) from EY. However, renewables remain crucial for achieving net zero emissions globally.

The report ranks the top 40 markets worldwide for attractiveness and investment in renewable energy. The US retains the top position, buoyed by strong solar growth due to incentives in the recently passed Inflation Reduction Act. Germany holds steady at number two, with continued expansion in onshore wind. China maintains the third spot but is on track to smash its 2030 renewables installation targets years in advance.

Offshore wind faces turbulent waters, however, with the UK dropping three places to seventh. The failure of the UK's latest CfD auction to award any offshore wind contracts highlights how rising costs have outpaced government subsidies. Delays and cancelled projects are occurring worldwide. EY suggests moving beyond price-only auctions and incorporating non-price factors to aid project delivery and support supply chains.

The Nordic countries climbed the rankings the most, with Denmark, Sweden and Norway rising two, three and five places respectively, showing strong renewable energy ambitions. Corporations continue to flock to PPAs for renewable energy procurement, especially in Europe, but squeezed developer margins are making deals challenging.

"The renewables sector has hit an inflection point, but this is not a reason to take the foot off the pedal of renewable energy deployment,”
said Ben Warren, EY’s RECAI Chief Editor. “Policymakers and governments need to hold their nerve, adjust incentive structures and auction designs, and keep working toward a net zero economy."

The report provides recommendations for governments to provide a smoother glidepath for renewables and ensure investors gain reasonable returns amid this time of transition. Streamlining permitting processes, reflecting real-world costs in auctions, and providing certainty on post-2030 plans can help manage the new realities.

For more information about offshore wind farm projects across the globe, click here.


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