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Record levels of investment for European wind farms

The European offshore wind industry has attracted more than €14 billion worth of investment in the past six months, with the UK being one of the biggest winners, a new report says. The record level of investment comes from 7 projects that have all reached the Final Investment Decision during the first months of 2016.

The report from WindEurope also indicates energy companies continued commitment to renewable forms of power generation, with companies such as Dong Energy and Siemens continuing to invest.

According to the report, there are now 82 wind farms across 11 countries with the capacity to produce 11,538 megawatts of power. 114 wind turbines have been grid connected in Europe in the first six months of the year, and work has been carried out on 13 windfarms, including four in the United Kingdom.

Commenting on the new figures, CEO of WindEurope, Giles Dickson, said:

“The record investment numbers show a clear industry commitment to offshore wind. We expect installations will pick up significantly in 2017 but there are a lot of challenges out there still on offshore wind. Not least the uncertainty over future volumes and regulation in many key markets for the period after 2020. We’re a long way from being able to say job done on offshore wind.”

Ministerial Support

The move toward wind power also has the backing of ministers. Recently, energy ministers from nine European countries met together to discuss what they could do to further enhance cooperation when it comes to offshore wind, and they also made commitments to reduce the costs involved in producing it.

Hornsea Project One

One of the biggest projects to receive a Final Investment Decision is the Hornsea Project One offshore wind farm, which is planned for Yorkshire. The site will have the ability to produce 1.2 gigawatts and will power more than 1 million homes, making it the world’s largest wind farm. DONG Energy also has the rights to a further two projects.

Government Subsidies

The record investments figures are good news for the UK, especially as the government announced in 2015 that it was to end subsidies for wind farms. This led to some fears that companies would be less willing to invest in this renewable form of energy, but the plans for many more projects show this might not be the case.

Instead, some energy producers are looking to alternative means of funding wind farms. Earlier this year, Good Energy announced plans for a wind farm in Cornwall, which will give members of the local community the opportunity to invest.

Mixed news for manufacturing

New figures from the CBI and Markit, show mixed news for the manufacturing sector. According to figures released from the CBI, manufacturing output and exports have shown a steady growth in recent months, however, manufacturers are less optimistic about the near future.

While output, employment and domestic orders were showing signs of improvement in the last quarter, post-Brexit, manufacturers are less optimistic moving forward.

CBI Chief Economist, Rain Newton Smith, said:

“Manufacturers picked up the pace over the second quarter, with output growing solidly. We’re also seeing encouraging signs of a boost to export competitiveness from a weaker sterling.

“But it’s clear that a cloud of uncertainty is hovering over industry, post-Brexit. We see this in weak expectations for new orders, a sharp fall in optimism and a scaling back of investment plans.”

UK Manufacturing PMI

The UK Purchasing Manufacturing PMI was also down to 48.2 for July, with production and consumer orders only experiencing a modest rise, which is thought to be largely due to the uncertainties surrounding the aftermath of the Brexit vote. The figures are the poorest for three years, but export orders received a boost.

Senior Economist, Rob Dobson from Markit, said:

“The final PMI came in at 48.2, down from the earlier flash print of 49.1. The pace of contraction was the fastest since early-2013 amid increasingly widespread reports that business activity has been adversely affected by the EU referendum. The drops in output, new orders and employment were all steeper than flash estimates.”

The demand for manufactured goods in the UK also appear to have been affected both prior to the vote and afterwards, and the PMI figures were also bad news the value of the pound, which fell sharply following the announcement.

Production and employment

The figures highlight concerns over employment figures in the manufacturing sector. Further job losses were recorded in July, and there are worries that the trend is set to continue. Production experienced the worst decline since 2012 and contractions were noted across the consumer, investment and intermediate goods sectors.

Recession fears

The poor performance of manufacturing had been expected following the Brexit vote and the uncertainty surrounding it. However, the PMI results were lower than predicted, and this has led to fresh concerns over a recession.

David Noble, Group Chief Executive Officer from the Chartered Institute of Procurement and Supply stated that without new orders coming through, the downward trajectory in the manufacturing sector is likely to get worse in the short term.

Hinkley Point C gets final funding approval

After months of delay, EDF has made the final funding decision over Hinkley Point C.  The decision was confirmed on July 28, following a meeting of the board of directors. The meeting approved the £18 billion of funding needed for the project, which will open up a new generation of nuclear energy for the UK.

Following the announcement, EDF stated it would be signing contracts with its overseas partner, China General Nuclear Power Generation, which has a 33.5 per cent share in the project, and with its main suppliers.

Speaking about the agreement between EDF and China General Nuclear Power Generation in 2015, the then Energy Secretary Amber Rudd, said:

“The Government will support new nuclear power stations as we move to a low-carbon future. Hinkley Point C will kick start this and is expected to be followed by more nuclear power stations, including Sizewell in Suffolk and Bradwell in Essex. This will provide essential financial and energy security for generations to come.”

Government Review

EDF was also expecting to sign contracts with the UK government. However, the government made the surprise announcement that it will be delaying the decision on whether to give the plant the go ahead.

The government will review the plans for Hinkley Point C and make the decision in the Autumn. Despite the delay, EDF has indicated that it’s confident the government will give the nuclear plans its approval.

In the meanwhile, Friends of the Earth has urged ministers to use the review as “an opportunity to do the right and popular thing and end support for Hinkley”.  The environmental organisation also argues that renewables and energy storage offer a better deal.

Concerns over Hinkley Point C

Environmentalists have raised concerns over the amount of nuclear waste that might be generated, and there has been some discussion over the costs to the consumer. However, the plans for the plant have been welcomed by Unite and several nuclear industry experts.

Energy security, carbon emissions and job creation

Alternative forms of producing energy are necessary if the government is to reduce carbon emissions and secure future power supply. Once it is up and running, the Somerset-based plant will have the capacity to power 6 million homes.

The project itself will create an estimated 25,000 jobs, as well as providing apprenticeship opportunities and boosting local business through supply contracts. When Hinkley Point C has been built, it is estimated there will be 900 ongoing jobs at the site.

https://www.markiteconomics.com

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