UK Energy Projects Stalled by Offtake Issues and Policy Uncertainty, EIC Reports
The Energy Industries Council report indicates that UK energy projects are facing delays in reaching final investment decisions due to difficulties in securing bankable offtake agreements and long-term revenue contracts. Policy uncertainty, permitting delays, and grid access issues are further complicating project delivery. The report emphasizes the need for integrated energy policy and government support to enable project financing, particularly for hydrogen and carbon capture utilization and storage (CCUS) initiatives, which are struggling to secure necessary commitments from buyers.
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The Energy Industries Council (EIC) report reveals that UK energy projects are increasingly stalled before final investment decisions (FID) due to challenges in obtaining bankable offtake agreements and long-term revenue contracts. 34% of interviewees highlighted viable offtake agreements as crucial for project financing, while 32% cited political and policy uncertainty as barriers. For offshore wind, only seven out of 33 projects reached FID, and hydrogen saw three out of 120 projects secure FID.
The report stresses the importance of government-backed support and clarity in policy to facilitate financing. Delivery risks, permitting delays, and grid access issues are identified as key constraints, particularly affecting newer technologies like hydrogen and CCUS, which require coordinated efforts across multiple sectors for successful financing.
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