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Renewable Energy - UK - October 2019

“While deployment of onshore wind and solar PV has slowed following the removal of government subsidies, the UK offshore wind sector continues to go through a period of strong expansion. Growth in the sector is driven by rapid cost reductions, technological innovation together with continued government support. Under government plans, offshore wind capacity is set to grow to 30GW by 2030, up from 8.5GW in Q1 2019.”
– Claudia Preedy, B2B analyst

This report looks at the following areas:

  • Continued government support, increased competition and technological innovation help to drive down offshore wind prices ahead of expectations
  • Investors are starting to see opportunities in subsidy-free projects, with solar PV at forefront of subsidy-free deployment

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Renewables account for a third of UK electricity generation in 2018
              • Figure 1: UK renewable penetration of electricity generation, 2014-18
            • UK renewable energy installed capacity dominated by wind
              • Figure 2: UK renewable energy market shares, by installed capacity, 2014 and 2019
            • UK aims to deliver 30GW of offshore wind capacity by 2030
              • Onshore wind not expected to grow by much without changes to planning and subsidy policy
                • Subsidy-free, large-scale, ground-mounted solar PV market starting to take off
                  • Renewable energy generation to show continued growth over the next 10 years
                    • Figure 3: Forecast renewable electricity generation, 2018-35
                  • Companies and brands
                    • UK offshore wind sector still dominated by utility-style owners
                      • Lightsource builds significant PPA-backed solar pipeline
                        • What we think
                        • Issues and Insights

                          • Continued government support, increased competition and technological innovation help to drive down offshore wind prices ahead of expectations
                            • The facts
                              • The implications
                                • Investors are starting to see opportunities in subsidy-free projects, with solar PV at forefront of subsidy-free deployment
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • Renewables account for a third of UK electricity generation in 2018
                                        • Clean energy sources set to outstrip fossil fuel for the first time in 2019
                                          • Offshore wind prices are falling ahead of market expectations
                                            • Subsidy-free, large-scale, ground-mounted solar PV market starting to take off
                                              • Energy storage to play key role in transition to clean electricity supply system
                                              • UK Electricity Generation

                                                • Overview
                                                    • Figure 4: Analysis of electricity generation in the UK, by type of fuel used, 2014-18
                                                    • Figure 5: Proportional importance of fuel source in UK electricity generation, 2014 and 2018
                                                  • UK renewables generation
                                                    • Renewables account for a third of UK electricity generation in 2018
                                                      • Clean energy sources set to outstrip fossil fuel for the first time in 2019
                                                        • Figure 6: Renewable electricity generation in the UK, 2014-18
                                                        • Figure 7: UK renewable energy market shares, by installed capacity, 2014 and 2019
                                                    • Wind Generation

                                                      • Overview
                                                        • Figure 8: UK onshore and offshore wind energy generation capacity, MW and %, 2014 and 2019
                                                      • Onshore Wind
                                                        • Onshore wind deployment stalls in 2018 due to subsidy removal
                                                          • Onshore wind not expected to grow by much without changes to planning and subsidy policy
                                                            • Government urged to support development of new onshore wind
                                                              • Offshore Wind
                                                                • 38 offshore wind farms operational in UK
                                                                  • UK aims to deliver 30GW of offshore wind capacity by 2030
                                                                    • The UK is the world leader in offshore wind
                                                                      • Offshore wind prices are plunging ahead of expectations
                                                                        • Bigger turbine sizes help slash costs of wind farms
                                                                          • Wind generation capacity and generation
                                                                            • Figure 9: UK wind energy capacity, 2014-19
                                                                            • Figure 10: UK wind energy generation, 2014-19
                                                                            • Figure 11: UK wind generation development pipeline, as of June 2019
                                                                        • Shoreline Wave/Tidal Generation

                                                                            • The Crown Estate licenses wave and tidal sites to help unlock opportunities
                                                                              • Hendry review concludes that tidal lagoons can play a cost-effective role in the UK’s energy mix
                                                                                • Private backers believe Swansea Bay tidal lagoon can be built without subsidies through PPAs
                                                                                  • Just 22MW of wave energy capacity installed to date
                                                                                    • Figure 12: UK wave energy capacity and generation, 2014-19
                                                                                    • Figure 13: UK wave and tidal capacity in development pipeline, as of June 2019
                                                                                • Photovoltaic Generation

                                                                                    • Ground-mounted sector moves into post-subsidy phase
                                                                                      • Emergence of PPAs presents growth opportunities for ground-mounted solar PV installations
                                                                                        • 1,054 solar farms (over 1MW) operational as of June 2019
                                                                                          • Solar PV deployment drops by 69% to just 291MW in 2018
                                                                                            • Figure 14: Photovoltaic installations in the UK, 2013-19
                                                                                            • Figure 15: Photovoltaic installations in the UK, 2011-18
                                                                                          • Large-scale installations of 5MW and above account for 45% of total installed solar PV capacity
                                                                                              • Figure 16: Photovoltaic installations in the UK, by capacity of installation, 2014-19
                                                                                              • Figure 17: Photovoltaic installed capacity in the UK, by size, as of June 2019
                                                                                            • Looking ahead solar PV deployment to be initially driven by ground-mounted installations
                                                                                                • Figure 18: UK PV development pipeline, as of June 2019
                                                                                            • Hydro Generation

                                                                                                  • Figure 19: UK hydro energy capacity, 2014-19
                                                                                                  • Figure 20: UK hydroelectricity generation, 2013-18
                                                                                                  • Figure 21: UK hydroelectricity development pipeline, as of June 2019
                                                                                              • Bioenergy Electricity Generation

                                                                                                  • Recent government policy changes affecting the bioenergy sector
                                                                                                    • Clean Growth Strategy highlights bioenergy’s potential
                                                                                                      • Trade association calls on government to commit to 16% of electricity from bioenergy by 2032
                                                                                                        • Landfill Gas
                                                                                                          • Sewage Sludge Digestion
                                                                                                            • Energy from Waste
                                                                                                              • Advanced conversion technology
                                                                                                                • Animal biomass
                                                                                                                  • Anaerobic digestion
                                                                                                                    • Co-firing and biomass
                                                                                                                      • Bioenergy installed capacity and generation
                                                                                                                        • Figure 22: UK bioenergy installed capacity, 2015-19
                                                                                                                        • Figure 23: UK bioenergy and waste generation energy capacity, as of end of March 2019
                                                                                                                        • Figure 24: UK bioenergy generation, 2015-19
                                                                                                                        • Figure 25: UK bioenergy development pipeline, as of June 2019
                                                                                                                    • Market Forecast

                                                                                                                      • Decarbonisation of UK energy system
                                                                                                                        • Government ambition to achieve net zero emissions by 2050 will push up electricity demand
                                                                                                                          • Growth in decentralised and renewable electricity generation will increase the complexity of operating a secure and cost-effective energy system
                                                                                                                            • Investors are starting to see opportunities in subsidy-free projects, storage projects and newer technologies
                                                                                                                              • Energy storage to play key role in transition to clean electricity supply system
                                                                                                                                • Renewables capacity development pipeline
                                                                                                                                  • Figure 26: Renewable energy projects in pipeline, by technology, as of March 2019
                                                                                                                                  • Figure 27: Forecast renewable electricity generation, 2018-35
                                                                                                                              • Future Energy Mix and Demand

                                                                                                                                • Future energy demand under National Grid’s Future Energy Scenarios
                                                                                                                                    • Figure 28: Annual power demand in Great Britain, 2018-50
                                                                                                                                    • Figure 29: Annual power demand in Great Britain, 2018-50
                                                                                                                                  • Future potential energy mix
                                                                                                                                      • Figure 30: Forecast power generation installed capacity under “Community Renewables” scenario, by source, 2018-50
                                                                                                                                      • Figure 31: Future potential energy mix in “Community Renewables” scenario in 2040
                                                                                                                                      • Figure 32: Forecast power generation installed capacity under “Two Degrees” scenario, by source, 2018-50
                                                                                                                                      • Figure 33: Future potential energy mix in “Two Degrees” scenario in 2040
                                                                                                                                      • Figure 34: Forecast power generation installed capacity under “Steady Progression” scenario, by source, 2018-50
                                                                                                                                      • Figure 35: Future potential energy mix in “Steady Progression” scenario in 2040
                                                                                                                                      • Figure 36: Forecast power generation installed capacity under “Consumer Evolution” scenario, by source, 2018-50
                                                                                                                                      • Figure 37: Future potential energy mix in “Consumer Evolution” scenario in 2040
                                                                                                                                  • Energy Policy and Legislative Environment

                                                                                                                                    • Government commitment to reduce carbon emissions
                                                                                                                                      • UK makes good progress in reducing CO2 emissions to date, but on track to miss targets between 2023 and 2032
                                                                                                                                        • Policies to decarbonise electricity
                                                                                                                                          • Renewables Obligation
                                                                                                                                            • Feed-in Tariffs
                                                                                                                                              • Carbon Price Floor
                                                                                                                                                • Contracts for Difference
                                                                                                                                                  • Capacity Market
                                                                                                                                                    • The Renewable Heat Incentive
                                                                                                                                                    • Companies and Brands – What You Need to Know

                                                                                                                                                      • UK offshore wind sector still dominated by utility-style owners
                                                                                                                                                        • BP invests in Lightsource to drive global solar expansion
                                                                                                                                                          • Lightsource builds significant PPA-backed solar pipeline
                                                                                                                                                            • Renewables at core of SSE Group’s business strategy
                                                                                                                                                            • Industry Structure

                                                                                                                                                              • Overview
                                                                                                                                                                • Figure 38: UK turnover of renewable energy industry, 2014-17
                                                                                                                                                                • Figure 39: Employment in key renewable energy sectors, 2015-17
                                                                                                                                                              • Abrupt government policy changes result in many companies exiting UK solar PV sector
                                                                                                                                                                • Figure 40: Employment and number of companies active across UK solar PV supply chain, 2012-17
                                                                                                                                                                • Figure 41: UK solar PV sector turnover, 2012-17
                                                                                                                                                              • Offshore wind industry continues to expand at pace
                                                                                                                                                                  • Figure 42: UK offshore wind sector turnover, 2012-17
                                                                                                                                                                  • Figure 43: Employment and number of companies active across UK offshore wind supply chain, 2012-17
                                                                                                                                                                • Onshore wind industry set to be restricted in the short term due to lack of government-backed routes to market
                                                                                                                                                                  • Figure 44: UK onshore wind sector turnover, 2012-17
                                                                                                                                                                  • Figure 45: Employment and number of companies active across UK onshore wind supply chain, 2012-17
                                                                                                                                                              • Company Profiles

                                                                                                                                                                • Biogen (UK)
                                                                                                                                                                  • Biogen (UK) purchased by Ancala Bioenergy in 2017
                                                                                                                                                                    • Biogen acquires Tamar Energy, creating one of the largest independent AD operators in the UK
                                                                                                                                                                      • Financial performance
                                                                                                                                                                        • Figure 46: Financial analysis of Biogen (UK), 2013-18
                                                                                                                                                                      • First Hydro Company
                                                                                                                                                                          • Figure 47: Financial analysis of First Hydro Company, 2014-18
                                                                                                                                                                        • Lightsource BP Renewable Energy Investment
                                                                                                                                                                          • BP invests in Lightsource to drive global expansion
                                                                                                                                                                            • Other recent partnerships
                                                                                                                                                                              • Operational solar assets
                                                                                                                                                                                • Operations and Maintenance
                                                                                                                                                                                  • Construction assets and pipeline
                                                                                                                                                                                    • Strategy
                                                                                                                                                                                      • Financial performance
                                                                                                                                                                                        • Figure 48: Lightsource BP Renewable Energy Investments, 2016-19
                                                                                                                                                                                      • ScottishPower Renewables
                                                                                                                                                                                        • Financial performance
                                                                                                                                                                                          • Figure 49: Financial analysis of ScottishPower Renewables, 2014-18
                                                                                                                                                                                        • SSE
                                                                                                                                                                                          • SSE and Npower scrap merger plans for their household supply businesses
                                                                                                                                                                                            • Renewables at core of SSE Group’s business strategy
                                                                                                                                                                                              • Financial performance
                                                                                                                                                                                                • Figure 50: Financial analysis of SSE, 2015-19
                                                                                                                                                                                                • Figure 51: SSE revenue segmental analysis, 2019
                                                                                                                                                                                              • Vattenfall Wind Power
                                                                                                                                                                                                • Company Outlook and Strategy
                                                                                                                                                                                                  • Financial performance
                                                                                                                                                                                                    • Figure 52: Financial analysis of Vattenfall Wind Power, 2014-18
                                                                                                                                                                                                  • Vestas-Celtic Wind Technology
                                                                                                                                                                                                    • Recent company activity
                                                                                                                                                                                                      • Financial performance
                                                                                                                                                                                                        • Figure 53: Financial analysis of Vestas-Celtic Wind Technology, 2014-18
                                                                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                                          • Methodology
                                                                                                                                                                                                          • Further Sources and Contacts

                                                                                                                                                                                                            • Trade associations
                                                                                                                                                                                                              • Trade magazines
                                                                                                                                                                                                                • Trade events

                                                                                                                                                                                                                Renewable Energy - UK - October 2019

                                                                                                                                                                                                                £995.00 (Excl.Tax)