3 July 2023
Blog by David Swindin, CEO
The City of London can be a Centre of Excellence, combining finance, skills and services that power the global transition to renewables, and supercharging UK exports at the same time.
In the 8 years since Cubico Sustainable Investments was formed, the UK has rightly been at the forefront of the transition to renewable electricity generation.
We’ve witnessed the world’s largest offshore wind farm become operational at Hornsea. We’ve seen days when nearly 90% of our electricity is generated from zero-carbon sources. We’ve become a leader in adopting utility-scale battery storage that helps balance those renewables.
Bringing together the necessary scientific, engineering, policy and, perhaps above all, financial expertise, made this possible.
The UK needs to continue that momentum, as electrification of everything from transport to heating to agriculture will prompt demand for electricity to increase by 50% by 2035. Despite sometimes failing to realise it or do enough to encourage it, the UK has become a global centre of excellence for bringing renewables onto the grid.
While great strides have been taken in decarbonising the electricity sector, the reality is that we’ve only tackled the low-hanging fruit. The mass deployment of renewables and investment in the technologies required to balance the intermittency of generation this will create is the current challenge facing the energy system. The UK can become a global leader in this transition, enabling export-led green growth.
The government’s ambition here is big. It thinks that green industries could create up to £170 billion in export sales by 2030. And according to figures from the Office for National Statistics, exports could generate 1.4 million green jobs across the UK by 2050.
From our experience here at Cubico’s London headquarters, we know that it is possible to globally deploy a unique offering from the City, combining capital and renewables project management expertise to accelerate the transition to renewables in other markets around the world.
In Brazil, we are currently developing our first one-gigawatt solar farm in the north of the country, which will be ready to start construction in early 2024.
In Uruguay, we’re the largest private investor in renewables.
And it is a particularly exciting time to be in Mexico where Cubico has long been one of the largest investors in renewable energy projects. As a result of incentives under the American Inflation Reduction Act to move the production of key renewable infrastructure to North America, we can already see the effects of that reshoring of investments away from some Asian markets to Mexico.
From our experience entering these markets, there is a strong UK quality mark that drives significant interest from Latin America and other developing markets. Having the financial muscle, skills and services to offer is one thing. What we find helps make a UK-based developer a partner of choice is London’s reputation for high standards of corporate governance, corporate social responsibility, deep financial pools, and the stability of a long-term partner.
We also know that the UK could be doing more to make the most of these advantages and learn from other active players supporting exports. We are fortunate to benefit from the backing of our Canadian pension fund manager shareholders, and we see first-hand the trade and credit assistance offered by Export Development Canada.
The UK can also take steps to ease some of the financial friction caused by outdated or no bilateral double tax treaties between the UK and other jurisdictions. The signing of the first treaty with Brazil last year was a significant step forward after many years of negotiations. However, there remains work to be done with a number of EU countries to replicate the terms which were available under the EU Directives.
Stable regulation and market design are essential for continued investor confidence and market growth, and the economic case for global green growth is clear. If government can embrace the opportunity that developing renewable projects around the world offers, it will benefit jobs and tax revenue here in the UK for decades to come.
Cubico stands ready to partner with our stakeholders in fostering the export of capital, skills and services, helping to make the City the global hub for this type of investing.