Richard Simon-Lewis, Head of Origination, Marketing & Communications for UK Export Finance, tells us about the government support available to help renewable energy companies export – including the new export development guarantee. Richard has over 20 years working in renewable energy, and, more recently, clean growth, and his career to date has included building an award-winning renewable energy financing franchise at a major UK bank.
The UK government is committed to supporting our renewables sector. According to statistics from the Department for Business, Energy and Industrial Strategy, 45% of our electricity was generated from renewable sources in the second quarter of 2020 – a nine percentage point increase on last year. Our renewable capacity is also up to 48.5 GW at the end of Q2 2020, a 5.4% increase on a year earlier, with 77% of that increase coming from offshore wind.
We are not alone in our increasing reliance on renewable energy. It now accounts for one-third of all global energy capacity, showing that there is a world of opportunity out there for UK exporters in the sector.
Many companies are already taking advantage of these opportunities, but sometimes it can be a challenge to ensure that your bid is competitive or to get appropriate financing or insurance from the private sector.
This is where UK Export Finance comes in.
Supporting UK exporters
We are the UK’s export credit agency, with a mission to ensure that no viable UK export fails for lack of finance or insurance from the private sector. We have been supporting our exporters for one hundred years and have a total capacity of £50 billion to help companies of all sizes and in all sectors sell internationally.
Our award-winning support helps UK companies win orders, fulfil export contracts and get paid, and we have a network of export finance managers around the UK to help companies access the finance they need to help them on their export journey.
We have a great deal of experience working in clean energy, with a recent independent assessment ranking UKEF as one of the top three ECAs in the world for sustainable deals, providing more support than France and Germany combined.
In the 2020 Budget, the Chancellor allocated £2 billion to UKEF’s direct lending facility to accelerate its support for clean growth and renewable energy projects across the world. This means UKEF can now provide direct loans dedicated to overseas buyers of UK renewable goods or services, creating opportunities for the UK supply chain.
With this support, companies can access the necessary cashflow and invest in innovation, secure in the knowledge that they can compete for business overseas and fulfil their existing contracts.
Powering Taiwan’s energy future
Over the last year, 30% of UKEF support for energy went to renewable projects. This included helping UK companies export to huge offshore wind projects off the coast of Taiwan.
The Formosa 2 and Changfang & Xidao together received £300 million in UKEF financing, and, when constructed will produce around 1 GW of electrical energy – helping Taiwan on its way to its target of producing 20% of its power through renewables by 2030.
As a result of UKEF’s support for these projects project, UK companies will be involved in their construction, helping to unlock the export potential of this growing sector of the UK economy.
UKEF has provided its support in New Taiwanese Dollars, one of over 60 currencies in which UKEF can offer financing, protecting the buyer from market fluctuations and making sourcing from the UK more attractive.
Leading with finance
Along with this direct support to UK exporters, we also incentivise overseas buyers to procure from the UK, connecting our supply chain to exporting opportunities. We are particularly active in emerging markets where the appetite for renewable energy is growing, with staff based around the world working to leverage business opportunities for UK suppliers.
Our presence in the renewables sector is growing ever stronger, and I am constantly struck with the depth of capability and skill that UK companies we have in this space.
Looking forward, I am looking forward to seeing us partner even more closely with the Renewable Energy Association to help us support the supply chain more effectively, and for us to continue our work in mobilising the oil and gas sector in its transition towards renewables.
As part of this, we are ramping up our marketing engagement in this space, and adapting our product offering, including the announcement of our new export development guarantee, which will allow UKEF to support an exporters’ overall working capital requirements, rather than linking support to specific export contracts.
A world of opportunity
As the world’s oldest export credit agency, UK Export Finance has 100 years of experience in making important overseas projects happen and thereby opening up opportunities for the UK supply chain to contribute.
We are currently the third-ranked ECA for supporting sustainable finance deals, and we have the ambition to reach number one. The government has set ambitious targets for the UK to become the world leader in wind power, and UKEF is here to ensure that our world-class companies have the support they need to grow and thrive.
Through strengthening our renewable supply chain by boosting their ability to win export contracts and connecting them with international opportunities, we can help the UK become a world-leader in clean energy.