Where Does Brexit Leave Offshore Wind?
With the UK referendum result to leave the European Union, along came reactions discussing effects of the country's move, including those from the offshore wind sector, where the UK is at the forefront.
According to BVG Associates' Director, Bruce Valpy, the implications for the UK as a whole will be known after the exit negations, which could take at least two years and any regulatory impact will depend on the inevitably protracted negotiations. "That uncertainty in itself has real implications for renewable projects in the UK. Investors generally dislike uncertainty and the price demanded for increased risk is increased returns."
When it comes to renewable energy targets, the UK set the bar high with its Climate Change Act, which leaves the country in a good position should the legally binding EU carbon-reduction commitments be removed, Valpy said. However, according to a statement by Pinsent Masons’ Jennifer Ballantyne from March, Brexit removing legally binding carbon-free targets could dilute the political will to deliver green power.
Also in March, Renewables Consulting Group (RCG) warned that Brexit was expected to leave the UK with little influence over EU energy regulation but still largely regulated by it. According to RCG, regulatory divergence will grow over time leaving the offshore wind supply chain less competitive against their European counterparts.
DONG Energy will wait to see the implications of the vote, like many other businesses, the company said. "However, we don't believe that UK energy policy is dependent on EU membership and we are confident that Dong Energy will continue to make an important contribution towards providing UK homes with a low carbon electricity supply in future," Grimsby Telegraph quotes DONG Energy's spokesperson as saying.
Bruce Valpy concluded: "Overall, we don’t see any need for knee-jerk responses. I am confident that our industry can rise to the challenges the decision presents and maybe find some new ways to benefit. Our can-do attitude will see us through. However things start to unfold, we will do ourselves a favour as an industry if we continue to tell the story about how offshore wind is already making such a positive difference to businesses and communities up and down our coasts."