Financing the energy transition is a major concern for policymakers. Chris Kelsey writes on the walesonline website about a recent report that highlights many of the issues.
Renewable energy projects stymied by lack of access to finance
A lack of access to funding is one of the biggest barriers preventing renewable energy from reaching its potential in Wales, a report published by the Institute of Welsh Affairs (IWA) said.
The report, Funding Renewable Energy Projects in Wales, highlights the missed opportunities as well as some of the main barriers to raising financial capital from within Wales for renewable energy schemes.
It has been compiled from a range of interviews conducted by Shea Buckland-Jones, project coordinator for the IWA’s Re-Energising Wales project, which aims to set out a plan to enable Wales to meet its projected energy demands entirely from renewable sources by 2035.
Mr Buckland-Jones said: “This report sets out an important overview of some of the barriers to investment in renewable projects, but more importantly a range of opportunities and investment options that could help raise financial capital from within Wales to support renewable energy projects.
“Wales needs to reach its renewable energy potential by taking advantage of its abundance of natural resources and should do so by investing in a way that ensures wider economic and social benefits are retained locally within Wales.
“Welsh Government, pension funds, local government, private sector and third sector organisations all have important roles to play in this and joined up thinking is required to make it happen.”
The report says that “significant numbers” of potential renewable energy projects in Wales have struggled to go ahead and obtain sufficient funding due to cuts in subsidies and other factors.
“Furthermore, significant recent projects have struggled (or not attempted) to attract Welsh capital funding, with profits then flowing outside Wales. However, there is money in Wales that could be used to invest in such projects.
“Local government pension funds, for example, have a collective investment of £13bn…. A significant proportion of this £13bn is invested outside of Wales and not directly in Welsh assets,” it says.
The report adds: “Local government pension funds in the UK invest over £14bn into fossil fuel companies. Welsh councils specifically invest £739m of their pension funds in fossil fuel companies.”
It also argues that a lack of ambition and of strategy is currently holding back investment in Wales. It singles out the Welsh Government as having a number of levers that it could use to stimulate investment, including powers over business rates relief which could drive community participation in renewable energy schemes.