Pinsent Masons: Renewables Could Face Brexit Paradox

Jennifer Ballantyne, Pinsent Masons’ partner and planning specialist, today warned of the paradox facing the UK renewable energy sector if the country decides to leave the European Union. 

Even though the UK could allow for an easier development of renewables infrastructure, the industry could be harmed by Brexit with the loss of incentives to develop a low-carbon economy, Pinsent Masons warned, explaining that a vote to leave Europe could remove legally binding carbon-free targets, which in turn could dilute the political will to deliver green power.

Ballantyne added: “There is good and bad for the industry in terms of the UK’s current relationship with the EU. The downside is that some segments of the market – for instance onshore and offshore wind – are over-regulated, with the EU imposing particular requirements which means the development process needs to be conducted in a particular way and a layer of constraints and extra costs are introduced.”

She cited designated environmentally protected areas as an example of over-regulation and exactly the types of places where there would be interest in building onshore or offshore wind farms.

However, the opportunity to radically overhaul regulation if Britain is out of Europe could be counter-balanced by the removal of legally binding carbon-free targets – which will undermine the political appetite to realise the full potential of renewables, according to the company.

Pinsent Masons further said that the removal of restrictive State Aid rules could have a significant impact on the renewables industry, while a new trade relationship could transform the profile of players in the UK wind sector.

Gary McGovern, a partner at the company, said: “There are opportunities. State Aid rules which impose a requirement to maintain a level playing field could be gone. For instance, a live issue currently is whether proposals to allow onshore wind projects on the Scottish Islands to retain access to the Contracts for Difference regime would fall foul of state aid rules if at the same time mainland wind projects are excluded.

“There could also be selective interventions to stimulate UK renewables manufacturing. All the major kit for renewable infrastructure is procured from continental Europe as there is little manufacturing base in the UK. There could be greater opportunity to stimulate that base through targeted action without fear of triggering State Aid rules, however there would be significant ground to be made up.

“On the other hand, it’s striking that much of the current investment and financing for renewables comes from outside the UK, and a significant proportion of the major players in UK renewables are owned by European parents. 

“For those subsidiaries of European businesses, or those reliant upon foreign investment, there will be concern over potential trade barriers which could make the UK a less attractive investment proposition.”