Clare E Foster, Head of Clean Energy, Partner, Banking and Finance, Shepherd and Wedderburn
At the start of November I shared a few thoughts on the role of onshore wind in the green recovery. Since then, RenewableUK’s Onshore Wind Energy 2020 conference took centre stage, and if I was seeking validation that the onshore wind industry was up for tackling the challenges, then I was not disappointed. There was an abundance of enthusiasm and optimism, both at levels which have not been present since 2015.
The language was consistent in reinforcing that sense of positivity, which is a remarkable change for an industry severely impacted for a number of years following the removal of the CfD in 2015 (and which has watched offshore wind accelerate ahead in the meantime). There was a buzz of excitement with numerous references to "enthusiasm", "optimism within Government" (particularly pertinent given the historic position of UK Government in relation to onshore wind), "step change in technology", "clean industrial revolution” and “collaboration”. There was also a real feeling of ambition around innovation - larger, more efficient turbines, co-location of battery storage and solar PV, and hydrogen being set to play a major role going forward.
The evident increase in UK Government enthusiasm is welcomed, and percolates throughout the industry. Onshore wind makes sense on so many different levels and at a time when we so desperately need to accelerate a green recovery, create jobs and decarbonise. This sector will undoubtedly play a critical role in helping Government achieve its aspirations to meet the legislative target of net zero by 2050.
There is of course a recognition that we still have a mountain to climb in terms of deployment, but what a prize to aim for! Various GW targets were referenced (I liked the “30 by 30” (30GW by 2030) reference) but I always go back to The Committee on Climate Change report, which refers to the UK’s onshore wind capacity increasing from 13GW now to 35GW by 2035. That is well over 1GW per annum and it will be transformational in energy and economic terms.
There was discussion around the need to build a route map and whether a target for onshore wind in 2030 will boost confidence. Given the challenges of grid, planning and aviation as well as the repowering required for older projects, there is certainly merit in developing a plan to navigate our way through, and staged auctions will be vital to facilitate market confidence for developers and investors.
Meantime there are already practical examples of the resurgence in onshore wind and various players are securing new land rights or varying existing land rights with future innovation in mind. Not surprisingly there was much talk of Scotland, and a recognition that there is also real opportunity in Wales, which to date has not fulfilled its onshore wind potential.
Of course a balanced debate required a recognition of the challenges ahead (with grid and planning across the UK playing their usual leading role). These were discussed in the context of collaboration, and it is here that onshore wind can look to the offshore wind sector for inspiration as to what can be achieved if the industry works together with multiple stakeholders. There is clearly appetite to do that and not only at developer level. Debt and equity are ready to play their part in funding this asset class. ESG factors are playing an ever-increasing role in investment decisions and there is recognition that innovation in structuring deals is key. Structures are now more sophisticated, whether looking at different combinations of revenue streams for offtake strategies, or through blending risk across portfolios of projects.
The UK has a huge opportunity to take great strides in onshore wind, now and in the future. And despite the challenges ahead the industry has signalled its intention to seize the day.”