Business leaders call for more incentives to invest in renewableUnited Kingdom
Severin Carrell, Scotland Correspondent
Before the renewables financing conference, major players say government guarantees are vital to meet ambitious climate change targets
Ministers are being urged to give guarantees that tax breaks and subsidies for new renewable power projects will remain in place for the long-term by senior figures in the business world.
Leading figures in the City also warn that the UK still lacks the port facilities, fabrication yards and grid connections that are essential if the country is to build the vast offshore windfarms needed to meet ambitious climate change targets.
Susan Rice, managing director of the Lloyds banking group in Scotland – one of the largest City investors in renewables – said companies were still wary about the risks and upfront costs of building multi-billion pound offshore windfarms.
"Some creative thinking from government would help us a great deal," she said. "For the projects which began last week we would like to have some assurance with finance. The government has the chance to be really helpful."
Rice is one of the main speakers at a renewables financing conference in Edinburgh tomorrow. Hosted by the first minister of Scotland, Alex Salmond, the conference will be attended by UK and Scottish energy ministers, the European Investment Bank, the European commission, energy companies and major European banks and investment funds.
Salmond said up to £200bn would be needed in the next 10 years across the UK and that he supported Rice's concerns.
He said the conference was designed to repeat the success of an investment conference held in 1972 in Aberdeen to plot the exploitation of North Sea oil and gas reserves. Estimates suggest that marine energy projects, including wind, wave and tidal power, could generate up to 68GW of electricity within Scottish waters by 2050 – 10 times Scotland's current electricity usage.
"I'm hoping this event will be a catalyst and that people will walk away from this conference thinking, 'Wow'," Salmond said. Last week, he raised the Scottish government's target for green electricity generation from 50% to 80% by 2020.
However, major energy companies have warned that British industry is still failing to exploit existing business opportunities. Vattenfall, the Swedish firm which built the world's largest offshore windfarm off Thanet, which opened last Thursday, admitted only 20% of the contracts for Thanet went to British firms.
Rice said these significant gaps in the infrastructure for marine energy programmes needed to be addressed. There was a lack of turbine manufacturers close to future offshore windfarm sites; inadequate ports and docking facilities; insufficient maintenance sites and no appropriate grid connections.
Because of their size, potential environmental impact and complexity, the upfront costs and planning needed for offshore projects meant the risks for investors also increased. "This funding gap in the preconstruction phase, which exists with all forms of renewable build, is biggest with offshore," she said.
The Scottish government is hoping to unveil a new green energy investment bank this year which could plough at least £360m into improving infrastructure.
But Paul Brewer, partner with the accountancy firm PWC and co-host of a keynote session at the conference with Rice, said the immediate funding gap was closer to £10bn across the UK, including £4bn in Scotland. That investment was needed before banks felt confident enough to begin lending.
"Securing large-scale finance for offshore windfarm developments is a challenge but until it is clear that the supply chain and port infrastructure to support this will be financed and delivered, the development finance challenge can't be fully addressed," Brewer said.
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