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The transition to renewables – a personal perspective

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On 12 February, Tom Glover, RWE’s UK Country Chair and RWE Renewables Chief Commercial Officer, gave the keynote speech at the Energy Industries Club’s (EIC) monthly lunch event in London. As this month’s speaker, Tom gave his personal reflections on RWE’s transition to becoming a leading global player in renewables.

The EIC comprises leading figures from the energy industry, who regularly come together to explore sector wide issues and opportunities. Around 65 members and guests gathered to hear Tom speak over lunch.

Having spent roughly 100 days on the board of the renewables business, previously serving on the board of the thermal generation business, Tom reflected on his experience so far and what he observes to be the main challenges currently faced by the renewables industry.

In his opening remarks, Tom noted that RWE is changing from one of the largest carbon emitters in Europe, to one of the world’s largest producers of renewable energy, with the ambition to become carbon neutral by 2040.

‘This is quite a transformation for us’ he added. ‘But if we can do it – anyone can!’

However, one of the key challenges for renewables is the ‘renewables paradox’ – in simple terms, this means that renewable energy is often harder to invest in the cheaper it becomes. This is due in part to ‘price cannibalisation’ – the more there is of any type of generation on system, the less amount of money that type of generation will earn. This is particularly true for wind and solar, in markets where the output from such assets is highly correlated and the production has near-zero marginal costs.

The second challenge is that of grid constraints, with some renewable projects facing long wait times to connect into the grid and often significant grid congestion once connected.

In his closing remarks, Tom gave advice to policy makers in light of these challenges: a more strategic approach is needed, setting clear pathways for development of renewables, supported by government-backed ‘contracts for difference’ (CFDs). In addition, a more strategic and upfront approach expanding grid capacity is required.

Tom urged the government to address these issues in the forthcoming Energy White Paper, which is expected to be published later in Q1 2020. The White Paper is expected to set out the UK’s plan for reaching net zero emissions by 2050. The UK will also host the next UN Climate Change Conference (‘COP26’) in Glasgow in November 2020, where parties will be urged to set challenging targets in order to tackle climate change.