Summary

The renewable energy market in the United Kingdom is expected to register a CAGR of more than 9% during the forecast period of 2021-2026, reaching around 86.21 GW by 2026, up from 47.16 GW in 2019. The COVID-19 pandemic has severely affected the country, with a large number of deaths and long-lasting lockdowns. However, factors such as supportive government policies and efforts to meet the rising power demand using renewable energy sources and decrease the dependency on fossil fuels to reduce carbon emissions are significant contributors to the growth of the market. The declining costs of renewable technologies are becoming competitive with fossil fuel sources, and additional subsidies on renewables are driving the market further. Even with a flourishing renewable market, the changes in government policies related to small-scale solar, such as removing subsidies, are expected to negatively impact the residential solar segment during the forecast period.

Key Highlights
With the most cost-effective way of power generation, wind energy is leading the renewable energy market in the country. The United Kingdom is also one of the leading countries in the offshore wind market as of 2019.
With ambitious offshore wind energy targets in place by 2030, huge market opportunities exist for wind energy market companies in the near future.
The different policies adopted by the United Kingdom, especially after the BREXIT, are expected to aid the market's growth.


Key Market Trends

Wind Energy to Drive the Market


The wind energy installed capacity in the country reached 24.1 GW in 2019, representing an increase of 10.7% compared to the previous year's value. The United Kingdom is also one of the leading countries across the world in terms of offshore wind energy, with an installed capacity of more than 9.97 GW in 2019. With several ambitious projects already in the development phase, the government is aiming to reach 20 GW by the end of 2030.
One of the major projects is the installation of East Anglia One offshore wind farm with a capacity of 714 MW. the United Kingdom government is all set for the development of East Anglia Two and East Anglia Three with capacities of 900 MW and 1400 MW, respectively. Such large-scale projects are expected to aid the growth of the market in the coming years.
Another significant installation is the Hornsea one, which is estimated to be operational by 2020. The United Kingdom will be operating the world’s largest offshore wind farm with a capacity of more than 1.2 GW generated by 174 turbines.
In 2019, wind energy produced 64.1 TWh of electricity with an installed capacity of more than 21 GW, contributing 17% of the entire United Kingdom’s power demand. Offshore and onshore wind energy is provided almost equally in the country.
Therefore, the high growth rate of wind energy makes the United Kingdom one of the renewable market leaders and drives towards a green future.


Uncertainties in the Government Policies


The United Kingdom regulated feed-in tariff in 2010. This boosted the installation of solar panels at a tremendous rate, increasing the solar electricity from 4TWh in 2014 to 12.7TWh in 2019. But in March 2019, the government closed this scheme. This has negatively affected the growth in the solar market, which has decreased by 1.4% in the 2018-2019 period.
With the discontinuation of the Feed-in Tariff, the government introduced Smart Export Guarantee (SEG), modifying the FIT, which makes the energy suppliers pay the customers for every unit they are going to feed in the grid, although the energy suppliers are free to decide the rate for exported power.
In June 2019, the United Kingdom government passed a law committing to achieve net-zero carbon emissions by 2050. For this, The United Kingdom is going to rely heavily on renewable like solar and wind. This is expected to aid the growth of the market.
Additionally, from October 2019, the United Kingdom government has increased the Value added tax (VAT) on Energy Saving Materials (ESM) by 15%. With incremented VAT, the customers must pay a 20% tax on solar and storage, affecting installers and increasing net installation cost significantly. Considering the recent 20% VAT on the high installation cost of solar, public interest in the solar market can be affected negatively.
The UK government’s policies and regulations are one of the significant factors that will be deciding the future of the renewable market in the United Kingdom. These different strategies can drive the market growth in either way.


Competitive Landscape

The UK renewable energy market is partially fragmented. Some of the major companies include Vestas Wind Systems A/S, Siemens Gamesa Renewable Energy SA, Electricite de France SA , Renewable Energy Systems Ltd, and Ecotricity Group Ltd.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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