Powering up: EU legislation and government support should fuel industry growth.
London, United Kingdom (PRWEB) September 17, 2013
The world's energy crisis has necessitated a radical shift among policy makers and participants in the Renewable Energy industry. Increased awareness surrounding the impacts of climate change has driven an aggressive decarbonising strategy, spearheaded by the Renewable Energy industry. Renewable sources accounted for 4.1% of final energy consumption in 2012, leaving the industry with plenty of work to do to meet the target of 15.0% by 2020. To meet this target, 30.0% of UK electricity has to be generated from renewable sources. In 2012 just 11.3% was produced this way. This has prompted a wave of investment in renewable technologies, particularly in wind energy, and led to dramatic increases in installed capacity and overall industry revenue.
The abundance of natural resources in the United Kingdom has boded well for industry operators as the economic benefits of renewable generation can be substantial. Significant growth in employment opportunities is evidenced by the 10.7% compound annual growth in this area over the past five years. According to IBISWorld industry analyst Lewis Sutton, “the dismal economic climate did little to temper consumer uptake of renewable energy, further incentivised through the feed-in-tariffs plan that rewarded households for generating their own renewable electricity”. In the five years through 2013-14, industry revenue is expected to grow at a compound annual rate of 6.9% to £5.3 billion, increasing 5.9% in 2013-14.
The future of the industry is inextricably linked to the level of government support and the willingness of consumers to bear higher costs. Funding and investment are critical to the industry if the United Kingdom is to achieve its 2020 target and not continue to lag behind its EU counterparts. Issues such as grid connectivity, skilled labour shortages and other process-oriented shortcomings must be resolved in order to ensure a profitable and smooth transition to renewable energy. While wind power will continue to lead the way, other sources such as hydropower, biomass and tidal energy also present strong opportunities for growth. Sutton adds, “prioritising access to renewable energy can help social and economic progress in the long term as it has the ability to strike the elusive balance between profitability and sustainability”. Subsequently, industry revenue is expected to increase at an accelerating rate in the five years through 2018-19.
The Renewable Energy industry has a low level of market concentration with significant segmental differences. The wind power segment, for example, is highly fragmented with a large number of companies that have both offshore and onshore wind facilities. The hydropower segment is similarly diverse, with a host of utility suppliers operating one or more dedicated hydro facilities in line with the RO set by the government. Most of these facilities are located in Scotland, which overwhelmingly accounts for the majority of the country's renewable energy output. In 2013-14, the top four players in the industry are expected to account for just over 39.0% of the market. The level of industry concentration has increased over the past five years as larger players like SSE increased their renewable investment and capacity. This growth has been helped by increased financial support from the government and lending institutions alike, while the uptake by consumers and industry has also been strong. Major companies include SSE, E.ON UK and Iberdrola SA.
For more information on the Renewable Energy industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
This industry comprises establishments that generate energy from renewable natural resources such as sunlight, wind, tides and geothermal heat. It only includes the generation of energy from sources that are inexhaustible and can be replenished indefinitely, unlike fossil fuels such as coal. This industry does not include transmission and distribution of renewable energy.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
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Barriers to Entry
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