Now that summer is around the corner, some thoughts are turning back to wind, rain and sun … the daily reminders hit us on the head that there is plenty of energy swilling around, and various economic and social incentives to tap into some of it. The problem is that these alternatives are nothing like as labour-intensive as coal mines, which means they don’t prop up the economy in the same way as what they are potentially replacing.
You can’t open up your own four-man coal-mine, but up until recently the manageable scale of renewable technology has made it an accessible small business option. Except, not so much any more.
Angus MacNeil, chairing a meeting of the Energy and Climate Change Committee at the start of March, claimed that recent unexpected changes to government policy had “spooked investors”. This may explain why the small business who come to our attention are in some cases turning to a variety of overseas opportunities instead.
As we’re an unusually crowded country (behind only Holland and Belgium in the list of comparable European states), you’d expect nimbyism to be part of the problem. Take a trip to Lowestoft, or just drive within a few miles of it, to see how a single renewable energy resource can dominate a landscape. Austria, Sweden, Portugal and Latvia are all countries with fewer than 100 people per square kilometer (the UK is more than twice as densely packed as that, and ten times more crowded than Sweden). Not coincidentally, they’re the states that generate more than half of their energy consumption from renewable sources. Holland and Belgium, fitting the pattern, haven’t got room to put up modern windmills, and lag behind the UK in the take-up of green energy.
Of course, we’re a National Association, not an International one, so when we see an entrepreneur driven abroad in the short term even if it’s not in the long term, we’re left wondering whether unstable policies are to blame. It could, of course, be a missed opportunity for lenders. Granted the repayment terms may be a little up in the air when you’re relying on the right kind of weather and the right type of government policies. I haven’t mentioned tidal power because that feels very much in its infancy and while it is immune to the vagaries of weather, it’s even more at the mercy of policy change than solar and wind energy, because there is a minimum scale at which viable designs can work.
So who is currently leading the way in lending on renewable energy projects? There are a couple of high street banks and a handful of smaller new lenders such as Assetz Capital and Amicus, but it’s a small number. Security is generally taken on the land on which the turbine, anaerobic digester or solar panel set is built – another reason why tidal power is difficult to fund.
I’d argue that there is a great deal of room for innovation in this field. The current conservative business model relies over-heavily on the relatively tried-and-tested technologies. There are 25-year-old wind turbines still turning out there, and we put solar panels on the Vanguard 1 satellite back in 1958! Until we can bring 1958-style innovation to the market, investors will continue to struggle.
