Chancellor’s decision to lift onshore wind ban set to ignite UK renewable investments

• Chancellor Reeves announces the end of the ban on new onshore wind projects in England, paving the way for a green energy surge.
• Labour’s policy aims to invigorate the renewables market, which already generates about one-third of UK energy.
• Retail investors have the opportunity to capitalise on the expansion whilst advancing the UK’s net zero agenda.
  

Tara Irwin, ESG analyst, Hargreaves Lansdown:

“Almost one-third of the electricity generated in Britain last year came from wind farms, a capacity capped by the ban on onshore wind. With the Labour government’s ambitious manifesto commitment to double onshore wind, triple solar power, and quadruple offshore wind by 2030, the UK is set to become a global leader in clean energy. This initiative promises fruitful returns for investors investing in renewable energy companies and funds as the market expands.

The Chancellor’s announcement also includes a proposal to incorporate onshore wind projects into the nationally significant infrastructure projects regime. This change will streamline decision-making processes, enhance project approval efficiency, and attract substantial private sector investment. For retail investors, this presents a unique opportunity to participate in the burgeoning green energy market, with the potential for robust financial returns and portfolio diversification.

Not only will the rollout of onshore wind farms increase low-cost energy, but it also offers a low-carbon alternative to help accelerate towards net zero goals. The Labour government’s pledge to ‘make Britain a clean energy superpower’ underscores a transformative vision for the UK’s energy landscape. By working with the private sector to bolster wind and solar capacities, investing in carbon capture and storage, and securing long-term energy storage solutions, the UK is laying the groundwork for a sustainable and resilient energy future. The strategy also includes reinforcing the nuclear sector, ensuring a phased transition in the North Sea, and introducing a carbon border adjustment mechanism to protect British industries.

Labour has provided the market indicators for the industry to expand and establish. Retail investors have a unique opportunity to support the UK’s journey towards a zero-carbon electricity system while enjoying the financial benefits of an industry set for growth. The end of the onshore wind ban marks a significant milestone in this journey, promising lower energy bills, enhanced energy security, and a greener future for all.

3 investment trusts to invest in renewable energy

Greencoat UK Wind

UK wind farms produce power and sell it under long-term agreements to utility companies who are obliged to produce a certain percentage of power from green sources. Greencoat UK Wind lets you invest directly into these wind farms. The trust invests in over 40 operating wind farms that produce enough clean energy to power one million homes. 

Revenues depend on the ongoing attractiveness of wind-farms investments in general, as well as wind conditions, which the fund has no control over. Investors should be aware that it may be harder to sell your shares as there may be limited buyers for the underlying investments.

The Renewables Infrastructure Group Limited (TRIG)

TRIG invests in companies and projects that produce clean electricity, contribute to European energy security and deliver shareholders long-term returns. The portfolio is capable of powering the equivalent of 1.9 million homes and avoiding 2.3 million tonnes of carbon emissions.

The London-listed trust is invested in a portfolio of wind, solar and battery storage projects spread across the UK, Ireland, France, Germany, Spain and Sweden.

Gresham House Energy Storage

The Gresham House Energy Storage trust invests in a portfolio of utility-scale operational battery energy storage systems across the UK. The systems help address supply-demand imbalances in the national grid.

When the national grid is at capacity, windfarm owners collect ‘constraint payments’ to switch their turbines off. In 2020 alone, the UK paid £274 million to switch off wind turbines due to excess supply. Battery energy storage provides the capacity to stockpile excess energy, that might otherwise be wasted, and release it when needed to keep supply consistent.

Another source of income for the fund is the UK government’s capacity market mechanism. This is when generators (including batteries) are paid a fixed fee for being on call to deliver power during times of extreme need, known as ‘stress events’. Battery energy storage systems provide a cost-effective solution to the intermittency of renewable energy. They will likely play a vital role in the rolling out of renewables.”

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