As in 2023, we expect to continue seeing the aggregation of operational renewable generation assets by parties looking to hold them over the longer term. There is also likely to be continued interest in investing in existing renewables developers and funds as those with funds to invest look to deploy capital in the infrastructure space with an eye on their ESG credentials and their own net zero targets. There will also continue to be significant interest amongst funds in acquiring development platforms with a pipeline of development projects rather than acquiring single assets.
Onshore wind
Whilst the UK Government had previously indicated an intention to relax the ban that has effectively been in place in respect of new onshore wind developments in England and Wales there was no significant progress in 2023. Since 2016, planning requirements have been such that it has effectively been impossible to obtain planning permission for a new onshore wind development in England and Wales. During this period, it has been possible to obtain planning for such developments in Scotland, where control over planning is devolved to Scottish government. As a consequence, England and Wales are lagging behind Scotland in the adoption of onshore wind. There is increasing pressure mounting on PM Rishi Sunak to remove the effective ban on onshore wind in England against the background of the energy crisis and ever heightening climate change concern. That said for the foreseeable future we expect onshore wind development in Great Britain to be concentrated in Scotland.
Offshore wind
The deployment of offshore wind generation continues to receive the strong backing of the UK Government which is targeting reaching 50GW of capacity by 2030. After the blip that was the 2023 CFD auction round where no offshore wind projects bid into the auction we can expect to see a realignment of strike prices for the next CFD auction as the UK Government moves to ensure that the target of 50GW of onshore wind is still within reach. Dogger Bank which, as the world’s largest offshore wind farm, is a strong statement of the UK’s continued intention to focus on being a world leader in offshore wind started generating electricity in 2023. We do not see this intention wavering in the short term even with the uncertainty brought by the upcoming election in the UK.
Solar
With the ongoing energy crisis and high energy bills, we expect to see rooftop solar continuing to gain in popularity as businesses and homeowners seek to protect themselves as much as they can against being a hostage to wholesale energy costs. The UK government taking the step of removing VAT on solar panels for residential properties will assist with the affordability of panels.
Changes to planning rules that allow the installation of solar panels on flat roofs on residential properties without planning permission. As well as the removal of the requirement for businesses to apply for planning permission where solar panels generate more than 1MW of electricity should further help stimulate demand in the rooftop solar space.
Ground mounted solar falls somewhere between offshore and onshore wind in terms of likely development this year. Solar does not have the same support as offshore wind but it is also not as dramatically hampered by adverse planning rules as onshore wind. We expect solar development to continue on its current trajectory but as with offshore wind, it remains to be seen how the upcoming election could impact new developments in 2024.
