Carter Jonas Gives Its Top 10 Predictions for How the 2020 Budget Will Impact the Energy Sector
Date of Article
Mar 10 2020
Property services

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Charles Hardcastle
Partner, Infrastructures
0113 203 1091 Email me About Charles
Charles is a Chartered Surveyor, RICS Registered Valuer and Head of the firm's Energy Team. He provides specialist advice on all manner of energy projects and associated infrastructure including: renewables, conventional oil and gas, shale gas, peak power generation and energy storage.Charles specifically advises landowners and developers on land referencing, site suitability, feasibility, technology selection and project delivery. He has specific expertise in site brokerage and negotiating option and lease, wayleave and access arrangements over sites for both landowners and developers. Charles also provides valuation and due diligence advice for secured lending, investment and agency purposes for renewable projects. Charles also advises private and institutional clients on all aspects of strategic rural, infrastructure and marine asset management.

Charles Hardcastle, Head of Carter Jonas’ Energy Team, gives a rundown of the top 10 policies that he and his team are keen to see introduced in tomorrow’s Budget. 

1. Commitment to Extend/Replace the Renewable Heat Incentive (RHI) Following its Planned Closure in 2021. 

“There is a general industry-wide view that the RHI needs to be extended past the current close date of March 2021 to meet heat decarbonisation targets and support the industry. The RHI supports technologies such as Biomass and Ground Source Heat Pumps and has been successfully utilised by homes and businesses switching to renewable energy heat sources, especially in rural and off-gas grid areas. The sector has helped reduce carbon emissions by approximately 50 million tonnes. There needs to be a clear, long term roadmap for heat policy to support the uptake of renewable heating across the UK.”

2. Additional Funding for the Installation of Publicly Accessible Electric Vehicle (EV) Chargers

“The UK Government has set a long-term plan for at least half of all new cars to be ultra-low emission by 2030, and all new cars and vans to be zero-emission by 2035. It is forecast that by 2020 there will be one million EVs, rising to 10 million by 2035. At present, there are less than 11,000 charging locations in the UK and not all locations are suitable for any vehicle and only 20% of these are rapid or ultra-rapid chargers. It is becoming critical that high quality charging infrastructure is put in place to support this forecast growth. This includes EV charging options for those who cannot charge at home – such as residential tenants or those in properties with no dedicated parking outside their home.” 

3. Continued Support to Incentivise the Uptake of EV’s / PHEV’s

“There are currently circa 265,000 EVs on the road and this number is increasing by approximately 100,000 vehicles a year. Whilst EV uptake is on the rise, continued support is needed to incentivise uptake to reach the government’s ambitious targets. More central government support is needed to support and encourage car manufacturers in developing affordable and attractive EVs, to support and encourage EV charger suppliers and developers, and to promote EV charging and its benefits to the public through jointly funded promotional campaigns with industry.” 

4. Commitment to Review Support for the Deployment of Energy Storage Assets  

“In 2019, around 50 battery storage projects were commissioned in the UK, providing approximately 500MW capacity with a further 800MW currently under construction or ready to be built in the next 12 months. This shows that the market for large-scale batteries is on the rise. These large-scale projects are finding ways of stacking revenue streams as the market matures, and projects utilising battery power are becoming more viable as costs continue to come down. However, there are still risks in the battery market which are causing investor caution and the government can play a role in mitigating this. Changes to peak charges, and Triads being cut, affect the economics of a battery scheme and are key reasons why smaller sized schemes are yet to break into the market. The government needs to provide long-term clarity over the available income streams in the years ahead and confirm how it envisages battery power supporting the UK grid – which it certainly will.”

5. Relaxation of Planning Policies Restricting the Development of Onshore Wind in England 

"In 2015, a ministerial statement removed central government planning backing for onshore wind and supported new planning rules that meant onshore wind turbines would only get the go-ahead if they had the full backing of the local community. This coupled with an announcement to exclude onshore wind from support through Contracts for Difference (CfDs) in favour of less established technologies, all but halted investment in onshore wind overnight.

“The Secretary of State for Business, Energy and Industrial Strategy (BEIS), recently confirmed that onshore wind, solar, floating offshore wind and certain energy storage projects will now be able to bid in the 2021 CfD round. This reversal of policy is a clear sign that these technologies are set to play a significant role in the government strategy to achieve its net-zero ambition. However, further clarity and advice around the planning issues relating to these types of development are now required if we are to ensure the successful rollout of these schemes." 

6. An Increase in the Business Rates Reliefs that are Available for Renewable Energy Assets

“In April 2017 the UK Government launched a revaluation of business rates. This saw a change to the valuation method for renewable energy assets, which now take into account financial benefits such as the Feed-In-Tariff (FiT) and Renewable Heat Incentive. Consequently, there has been a significant increase in the rates payable by renewable generators. Schemes are now struggling to be financially viable and investors have been put off. If a government aim is to encourage the uptake of renewable energy, then there is a need to review business rates and provide further rates relief in this Budget.” 

7. Support to Enable Communities to Develop their Own Renewable Energy Projects

“A key reason why some large-scale renewable energy developments, particularly in England, have come unstuck is because of a lack of support from local communities. Community involvement in how they are run is essential to success, as is the ability for residents to benefit from the power produced. Giving communities access to funding, as well as the correct advice on the relevant technologies, would be transformative.” 

8. Greater Support for Other Technologies Such as Solar, Geothermal, Tidal, and Hydro 

“Since the end of the FiT in April 2019, there has been a substantial drop in the number of new renewable energy installations because these projects have become financially unviable. To fill the gap, the Smart Export Guarantee (SEG) was introduced to pay generators for the energy they export to the grid. However, the design of the SEG means that it is left up to the individual suppliers to set a tariff, which has resulted in confusion. BEIS has already stated that it hopes the tariffs will become increasingly smart over time – but the 2020 Budget could be an opportunity to properly codify funding for emerging technologies.”

9. Commitment to Increase Grid Capacity

“The UK grid quickly needs vast improvements. Ofgem will soon publish a review of the UK’s existing electrical system model and what needs to change as the country gears up to be net-zero carbon by 2050. With more renewables and energy storage being connected to the grid network, the pressure on existing infrastructure is significant when wind and solar power are both high. The grid needs to be smarter to cope when under pressure. The widespread power cut of last August highlights the requirement for more energy storage. The Treasury would be wise to allocate funding for these important infrastructure updates.” 

10. A New Commitment to Support the Supply Chain 

“Manufacturing in the UK has been on the decline over the past few decades. However, the UK is increasingly becoming a world leader in renewable energy technology. Boosted funding commitments to support the UK supply chain and manufacturers would help to reduce the costs of renewable energy projects and make them more viable - without subsidy.”