STRENGTHS

  • Under the EU’s sustainable energy targets, the UK is obliged to generate 15% of its electricity from renewable energy sources by 2020.
  • Average annual investment in renewable energy production has doubled over the past few years, reaching around £8bn in 2013.
  • The UK is endowed with varied renewable energy resources in Europe, including wind, wave and tidal resources.
  • Solar photovoltaic’s (PV) enable domestic generation of renewable energy.
  • The renewable energy market is supported by a number of government policies and incentives, such as Contract for Difference (CfD) scheme and Ofgem’s Renewables Obligation (RO) scheme.

WEAKNESSES

 

  • Investment in renewable energy technology has been affected by financial issues due to the recession and market uncertainty.
  • The cost of developing and building wind farms, biomass plants and solar farms is high.
  • Limited Government funding for key technologies, such as onshore wind, solar and biomass, is likely to have a negative impact on investment in renewable technology.
  • The lack of a consistent, long-term commitment from the UK Government may have a negative impact on renewable investors’ confidence, which is essential to achieve long-term plans for renewable energy.
  • From the point of view of energy companies, to invest in large capital intensive renewable energy projects, these projects need to be commercially viable and generate enough return on investment; however, this is largely dependent upon the regulations and incentives provided by the Government.
  • The building of solar farms often involves protests by local groups and residents, as they are considered unsightly and damaging to the local landscape and wildlife.

OPPORTUNITIES

 

  • Geographically, the UK is one of the windiest countries in Europe. This puts the UK in an excellent position to optimise the potential of wind power.
  • The Government’s allocation of a £300m budget for low-carbon technology through the CfD scheme will prompt a new surge in renewable energy investment over the next few years.
  • The UK’s offshore wind market is one of the most established in the world.
  • The UK can look to export its expertise to international markets.
  • Technological advancements and innovations will help to boost renewable technology and reduce costs.
  • Continued economic growth will stimulate overall energy consumption, including consumption of renewable energy.

THREATS

 

  • According to EY in September 2014, the UK’s attractiveness as an investment destination for renewable energy plants has dropped to seventh place, the lowest since December 2009.
  • The UK Government recently announced plans to cut subsidies for large-scale solar schemes — the Renewable Obligation (RO) scheme — from April 2015.
  • As such, larger solar farm developers will be forced to compete for CfD subsidies. Furthermore, the lack of a consistent, long-term commitment from the Government provides a degree of uncertainty and may have a negative impact on investors’ confidence in the UK as a destination for renewable energy generation.
  • Hydropower generated from inland sources has been affected by climate change, as it relies on regular rainfall.
  • Nuclear energy may rival renewable energy sources and could become the preferred low-carbon energy source in the UK.