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Brexit would harm European wind market
Next month, the people of the UK are set to vote on whether they want the country to stay in the European Union.
It is a decision that could have huge ramifications on the future of the EU, as well as in major areas of policy including the economy, defence and migration. It would also have a big impact on Europe's
energy policy and, therefore, on wind too.
So what happens to wind if the UK leaves the EU? The truthful answer, unfortunately, is that it is anyone’s guess. Nobody knows. That may sound like a cop-out, but anyone who claims any special knowledge about the impacts of Brexit is deluded or lying.
That is the problem. There are so many politicians and other players that would come into play in our potential post-Brexit Europe that making accurate forecasts is impossible. UK voters may decry the amount of fear-mongering in this referendum debate and the lack of facts, figures and reasoned argument, but it cannot be any other way. Any information put out by the ‘Leave’ or ‘Remain’ campaigns will be shaped by their own prejudices.
And we can broaden that out. Any information from any source, including us, will be shaped by its prejudices. For example, is the writer naturally cautious or hung-ho? That will have an effect.
Our starting point is that we would rather see the UK stay in the EU because it would help protect London’s status as a financial centre; and that it would also be a better option to support the growth of renewables in Europe. So, with that in mind, we can return to the original question. What so we think would happen to wind?
In the UK, we think leaving the EU would be a further blow to the future of the wind market. Brexiters may deride the amount of ‘bureaucracy’ that comes out of the EU, as do many of those who work in or with the EU. However, the EU has also pushed on with targets to help increase the amount of renewables in the energy mix and mitigate the risks of climate change. If the UK leaves the EU then it would allow it to further cut support for wind power.
This would have three impacts on UK wind businesses.
First, it would reduce the amount of work in the UK, which would put them under financial pressure to expand globally.
Second, that global expansion would be more difficult because the UK would need to renegotiate its cross-border trade agreements.
And third, it would mean less investment coming into the UK from wind companies from around the world, which would also reduce demand for UK firms' products.
In short, we see Brexit as a threat to UK wind businesses. Even if a post-Brexit UK could secure strong global trade deals, it seems to offer little that we do not have at present.
But the risks are not confined to the UK. If the UK votes to leave there is a strong chance that the EU could fall apart and, over time, that would slow the introduction of renewable energy targets. Countries can still negotiate ambitious targets outside the EU, of course, but the leadership position played by the EU would be lost. This can only make it tougher for wind businesses in the Europe to compete against rivals from China and the US.
It would also have a major impact on investor confidence.
At present, institutional investors feel confident about investing in wind because they know that countries are bound by EU targets. Removing these targets would hit their confidence and mean less money for wind, which can only impede the growth of the sector. And that is not to mention the threat that a collapsing EU would pose to a global financial system that remains shaky and skittish.
Brexiters would say we are too pessimistic, and perhaps we are. However, though the EU is an imperfect organisation, we see little reason to think wind would fare any better if the EU disappeared.
That is why we think wind is better served with the UK inside the EU — and we think that is how the UK will vote on 23 June.