Relaxed UK Onshore Wind Rules Open Gate for Renewables Rush
Labour’s ambitious 2030 plans for clean energy require a rapid scale-up, but caution remains following a decade-long de-facto ban.
Recent changes to the UK’s onshore wind policy by the freshly elected Labour government present a major opportunity for investors to support the nation’s renewable projects and decarbonisation efforts, winning the praise of sector experts.
Despite the UK exceeding 15 gigawatts (GW) of fully operational onshore wind capacity in March with more than 9000 turbines – accounting for 11% of Britain’s energy mix, and enough to power 9.9 million homes all year round – and being one of the cheapest and fastest to deploy forms of new power generation, development has been hampered by a de-facto ban since 2015.
The ban resulted from footnotes included in the UK’s National Planning Policy Framework – which governs home and infrastructure-building – that applied exclusively to onshore wind. However, earlier this month, the new government acted to immediately address and remove the prohibition.
“This move provides investment certainty that will accelerate the rollout of even more green generation in the UK, representing a major opportunity for institutional investors to drive this expansion,” Alex Brierley, Co-head of Octopus Energy Generation’s fund management team, told ESG Investor.
Onshore and offshore wind power is already a cornerstone of the UK’s energy mix that surpasses gas as its main electricity source, Brierley explained. “The UK has one of the world’s leading offshore wind industries, and with these latest planning reforms, onshore wind can now play an even greater role and become an even more attractive investment opportunity.”
Following the rule change by Labour, Octopus Energy plans to launch new onshore wind projects in the near future, while international developers including RWE, RES Group, EDF Renewables, Coriolis Energy and Ridge Energy confirmed they would explore potential projects.
“Onshore wind is one of the fastest to deploy, cheapest forms of new power generation,” said Frankie Mayo, Senior Energy and Climate Analyst at Ember Climate. “Alongside offshore wind and solar, the backbone of the future energy system will be cheap, clean and homegrown renewable energy – but each of these will need to be deployed faster and at scale to meet decarbonisation targets.
“Once the hangover of the de-facto onshore wind ban lifts and the sector is fully up and running, onshore wind can unlock a lot of low-cost clean power very quickly,” he added.
Rebounding from damaging delays
As part of its election manifesto, the Labour party has committed to doubling onshore wind and quadrupling offshore wind by 2030. However, this will require a rapid scale-up in capacity from 15GW to 30GW for onshore wind and up to 60GW for offshore wind – causing some pundits to cast doubts as to the feasibility of these plans.
“Labour’s pledge to double onshore wind by 2030 would, if successful, lead to a material reduction in electricity costs for households and enable to meet the commitment to cut carbon emissions by 68% – as well as obligations set by the legislated 2050 net-zero target,” said Tommy Kristoffersen, EdenTree’s Green Infrastructure Fund Manager. “How feasible this is will depend on how far the government goes in streamlining planning processes and grid improvements, as well as how it approaches incentivising future development.”
The UK currently has 13.9GW of offshore wind fully commissioned, houses 43% of all European offshore wind capacity, and has more offshore windfarms than any other country in the world – bar China.
While UK offshore wind has seen notable growth in recent years, the de-facto ban has proven a major stumbling block for onshore. According to reports, only a single turbine was erected in England across the whole of 2023, while just seven applications were submitted for onshore wind turbines.
“The government has moved quickly on its agenda, and the industry strongly supports the removal of the ban on onshore wind – but we also have to recognise the damage done after nine years of a nonsensical ban,” warned Adam Berman, Deputy Director of Policy at Energy UK. “There are now almost no onshore wind projects in the pipeline in England, and it will take time before shovels are in the ground for any new projects.”
According to polling conducted by renewable energy trade association RenewableUK after the ban was lifted, 78% of respondents backed onshore wind across the country. According to the UK Department for Energy Security and Net Zero, electricity from gas-fired power stations is almost three times as expensive to produce compared to wind and solar.
During last week’s King’s Speech, Labour confirmed plans to roll out GB Energy – a new publicly owned energy company – which had originally been proposed in 2022. The project involves public investment of £8.3 billion (US$10.7 billion) and partnerships with the private sector to develop assets – with some finance expected to go to wind energy. In addition, the recently unveiled National Wealth Fund and GB Energy will aim to crowd in private finance, helping stimulate the growth of renewable energy in the UK.
“One of the biggest obstacles to meeting [Labour’s wind] targets is related to planning regulations and grid infrastructure,” said Kristoffersen. “By taking rapid action to improve planning conditions and indicating a possible role for GB Energy in streamlining grid infrastructure upgrades, the new government has shown it is serious about tackling the actual problems that have previously led people to question the viability of these goals”.
Grid connection conundrum
Broadly, the industry has welcomed Labour’s commitment to tackle grid connection delays, which the party’s manifesto described as the “single-biggest obstacle to the deployment of cheap, clean power generation and to electrification of the industry”.
Similarly, Ember’s Mayo said he welcomed the lifting of the onshore wind ban – but underscored that action on the grid connection queue remained critical before further development could be realised.
More specifically, the UK needs to rapidly expand its electricity grid to meet its renewables targets, with five times more electricity infrastructure required by 2030 than in the past three decades to deliver a net-zero grid.
“By tackling planning and grid issues alongside maintaining the investability of clean energy infrastructure in the UK, there’s no doubt we can move very quickly in the direction of a clean power system by 2030,” Berman noted.
Earlier this year, the National Grid Electricity System Operator (ESO) proposed a £58 billion investment in the UK’s electricity grid between 2030 and 2035 – in addition to £54 billion of grid works already planned by 2030.
In December, the ESO flagged that applications for green connections representing 573GW of power generation had been made – far in excess of the current installed capacity of approximately 70GW – with proposed infrastructure projects that could add up to £15 billion to the UK economy and create more than 20,000 jobs each year.
The post Relaxed UK Onshore Wind Rules Open Gate for Renewables Rush appeared first on ESG Investor.