By Mark Potter, Head of Renewable Energy at RSA
The number of countries with renewable energy targets more than doubled between 2005 and 2011. This is a clear sign that policymakers have seen the importance of promoting the benefits of clean energy, including the reduction of greenhouse gas emissions, job creation, the development of rural areas and greater independence and security of energy supply.
Last year, €12.6 billion was invested in wind farms in the EU. Nevertheless there seem to be some challenges ahead for this sector since the continuing European sovereign debt crisis is likely to negatively affect future growth, as some countries across Europe begin to see investment and subsidies for further development in renewable energy reduced.
In the UK in particular, there is the Electricity Market Reform (EMR) which is currently under development and is aimed at ensuring there are sufficient incentives in place to deliver required investment in secure, affordable low carbon generation. However, the EMR and subsequent draft Energy Bill are currently lacking some crucial details which, if not clarified and developed further could have a real negative impact on future project development and result in investment being postponed or cancelled altogether.
Innovative financing solutions and realistic long-term feed in tariffs, coupled with a supportive legislative environment are critical to secure the investment required within this sector. In the EU, the target is to generate 20% of energy from non-fossil fuel sources by 2020. If we want to achieve this, it is fundamental that governments provide competitive and lasting financial incentives for renewable energy developments to give investors the confidence to invest in the long term.
As an insurer, we play a vital role in providing security for investment in the sector by reducing existing and emerging risks involved in wind energy and indeed other renewable technologies, so that manufacturers and project developers can advance with the next generation of clean energy. By reducing risks we make investment in these technologies possible and bring renewable energy projects to life, onshore and offshore wind farms being a key part of that. It has never been clearer that there are significant challenges and barriers to overcome before we reach widespread adoption of renewable energy, not least the challenge that reduced investment brings but these can absolutely be overcome if we all work together: manufacturers, developers, Governments, trade associations, investors and insurers – we all have a role to play.