The UK government’s move to exclude renewables from the Climate Change Levy (CCL) exemption will for sure hit investment in the short term, with the wind segment being the worst affected, GlobalData says.
Still, the country’s renewable energy capacity will continue to grow in the long term.
After August 1 renewable electricity will no longer be exempt from the CCL, UK chancellor George Osborne said in the 2015 Summer Budget earlier this month. GlobalData senior analyst for power, Prasad Tanikella, said that the decision would bring about GBP 490 million (USD 764.6m/EUR 691m) during 2015-2016 for the government, and that amount would climb to GBP 1 billion in 2020-2021.
The UK onshore wind sector is to be the worst affected in the next few years, while the effect on offshore wind would not be “substantially detrimental”, the research company said. The wind project pipeline in the country currently surpasses 43 GW, of which just 12.5 GW are onshore.
Tanikella also said that the UK government’s recent proposal to end subsidies for small-scale solar farms from April 2016 would dent investor confidence and slow down investments in the industry.