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The Renewable Revolution: The economic benefits of the renewable sector
At Lichfields, our economics team has been working to assess the economic benefits of a variety of renewable energy projects, including off-shore wind; energy from waste; and solar farm proposals. We have also been supporting clients by considering the suitability of sites for solar farms using our Locate:Solar product. We understand that renewable energy can deliver a range of economic benefits. During construction, this can include:  Generating construction jobs through tasks such as site preparation and installation works; and   Supporting indirect jobs in manufacturing and distributing materials (such as turbines and solar panels). Developments also deliver economic and environmental benefits during operation, including:  Supporting high-quality jobs in the operation and maintenance of the site, uplifting wages in the local area;   Delivering additional local jobs in the supply chain and related services;   Energy benefits such as increasing the reliability and resilience of power, and potentially also reducing energy costs for residents within the local area;   Environmental benefits such as powering a number of homes directly from renewable sources, offsetting CO2 production, and contributing towards corporate sustainability goals. For instance, a recent assessment we completed demonstrated that a 50MW solar farm will offset 14,340 tonnes of CO2 per annum, which is the equivalent of taking 7,900 cars off the road. One of the key outcomes of last year’s Glasgow Climate Pact agreement was the united global effort to reduce coal dependence, making it the first deal of its kind. The UK has already made some progress towards the shift to renewable energy – 2020 was the first year in UK history where renewable energy generation exceeded fossil fuel generation. Indeed, environmental and sustainability targets have been set within UK law since 1974 (Environment Protection Act). Despite making good progress towards the low-carbon shift compared to other countries such as the G7 nations (Figure 1), the UK is still projected to fail in meeting its own targets of reducing CO2 levels by 100% on 1990 levels[1].   Figure 1 G7 Nations % change in CO2 emissions-per-capita Source: Our World in Data/Lichfields analysis The specific wording of the commitment agreed at COP26 was for countries to ‘phase down’ the use of coal – a gradual decrease in the reliance on coal as a source of energy. To many, this is a disappointing conclusion given the initial proposal to ‘phase out’ coal entirely, although for many countries (including the UK), their own individual targets will ensure that coal is phased out. For example, in May 2019, the UK went a week without using coal energy for the first time since 1882. Unfortunately, it seems it may take longer for all countries to reach the same stage. The leading opposition to the concept of ‘phasing out’ – India and China – stated that developing countries “still have to deal with their development agendas and poverty eradication.” I find this quote particularly interesting for a couple of reasons. First of all, whilst development agendas are clearly vitally important, this cannot be at the expense of jeopardising the planet’s future. The quote also seems to imply that sustainable/renewable energy doesn’t generate its own economic benefits (or at least it downplays it), as though renewable energy cannot contribute to eradicating poverty. Individual sectors within the renewables market are explored below to provide some understanding of the spatial differences in provision across the UK. This is supported by Figure 2, which outlines the top 10% (by MWh capacity) of renewable energy sites for each of the main forms of renewable energy technology. Figure 2: Top 10% of sites (by MW capacity) of each renewable energy typeSource: Renewable Energy Planning Database (2021) / Lichfields analysis   Table 1 Summary statistics of UK renewables sector Source: ONS Energy Trends: Renewable electricity capacity and generation (2022) / Lichfields Table 1 provides a summary of the five largest renewable energy sectors in the UK. It demonstrates that:  Total wind power accounts for a considerable amount of UK energy production, with a total installed capacity of 25.7MW and accounting for 20.9% of overall UK electricity generation;   Onshore wind farms are typically smaller in scale compared to their offshore counterparts, represented by a lower average capacity, but are significantly more prominent in terms of quantity. The largest onshore wind farms are heavily concentrated in Scotland and the largest offshore wind farms are located across the North Sea (Figure 2);   Biomass is the second largest renewable energy type by generation and features the UK’s largest renewable energy site. It is also noted as one of the more reliable forms of renewable energy due to it being less dependent on exogenous factors. This is highlighted by the fact that onshore wind, offshore wind and solar PV all have a larger theoretical installed capacity – therefore have the potential to produce more power if running at full-capacity all the time. In reality, however, biomass has the highest actual output indicating that, in comparison, this technology’s output is proportionately closest to its theoretical capacity.   Solar PV accounts for the largest number of sites in the UK and, unsurprisingly, is more prominent in England (Figure 2). The sector has seen the highest rate of growth of any renewable/non-renewable technology since 2012 by a considerable margin – a positive consequence of the falling costs of solar panels (0ver 70% in the last decade).   Based on current provision, large hydro is the least prominent technology type across all of the metrics used, largely due to the availability of appropriate land to build large-scale sites on. This is despite it being the largest source of renewable energy globally[5]. Nevertheless, large hydro sites in the UK have the potential to generate power for over 700,000 homes and is also cited as one of the more reliable forms of renewable energy due to its ability to run for a long period of time. The Net Zero Strategy: Build Back Greener (Oct 2021) highlights an obvious need to invest in a mix of renewable energies in order to meet the UK’s Net Zero targets, with focus likely to be on offshore wind and low-cost renewable types (onshore wind and solar). It also, importantly, outlines that investment into a mix of renewable energy will contribute to the economic objectives of the nation. Therefore, in planning for new renewable energy sites, whilst the sustainability benefits of this are clear, it is important to recognise the economic opportunities that also arise. [1] CarbonBrief: CCC: UK will miss climate goals by ‘huge margin’ without new policies[2] Plant and Animal Biomass combined[3] Renewable Energy Planning Database (2021) / Lichfields analysis[4] Biomass capacity only[5] MIT Climate Portal: Why aren’t we looking at more hydropower