By Tim Reid, Chief Executive, Director General, UKEF, and Executive Committee Member
It is no secret that we, as a UK government department, have a crucial role to play in supporting the renewable energy transition. Transitioning away from fossil fuels and promoting the creation and distribution of new technologies is vital to ensuring a sustainable energy future.
The UK is an innovator in the renewables sector and has a significant international impact by helping to lead by example. With renewables accounting for approximately a third of global energy capacity, we have seen a lot of progress. However, there is still a lot more that can be done to accelerate this progress, both domestically and overseas.
Exporting is a direct means for the UK to lead by example when it comes to renewable energy, allowing for British-made products to be made available in other markets. Access to renewable technologies increases the potential to adopt solar, wind and other renewable energy infrastructures, all while fostering international collaborations.
Supporting domestic players to drive international change
UK Export Finance (UKEF), the UK government’s export credit agency, exists to support UK-based companies to gain access to finance and insurance, overcoming barriers to reaching international markets.
A great example of the impact UKEF’s support can have, is a recent financing deal secured for Hampshire-based Hive Energy. It is a business founded with the initial goal of supplying green energy to the UK market through the development of innovative technology. Following 14 years of immense growth within the business and the broader green energy sector, Hive remains committed to serving the UK market while also looking beyond the horizon at new opportunities overseas.
Hive is now aiming to further develop clean energy projects and smart solutions, increasing its presence on the global stage. Through its expansion of products such as hydrogen and battery storage, Hive is leading the way in cutting edge renewable technologies that are being adopted across international markets.
Following support from the UK government, Hive has expanded its operations countries such as Italy, Spain, Turkey, Chile and South Africa.
The severity of climate is not lost on businesses nor on the UK government. However, by supporting the growth of green energy enterprises the UK government can contribute to mitigating climate change on all fronts.
Overcoming barriers to growth
Hive Energy identifies greenfield sites for solar parks, develops them to grid-connection stage, and then sells them to reinvest in new projects. This business model comes with some financial difficulty as the initial acquisition and development require a significant upfront investment, which is not recovered until the project is sold.
A lack of a financial guarantee, coupled with Hive not operating the facilities they develop, can lead to inconsistent revenue streams. Therefore, like many businesses, Hive relies mostly on the money generated directly from project sales. This often results in lenders being hesitant in providing support, which consequently can mean a large – and frustrating – block on fulfilling growth opportunities and serving overseas demand for renewable technology.
Realising the UK’s renewables potential
UKEF’s support package for Hive Energy has assisted the business in securing a £19 million export finance package from Santander, as part of UKEF’s General Export Facility (GEF) scheme.
GEF supports forms a partial guarantee to a UK business’s bank, which is not tied to a specific export contract and secures working capital to support business growth. As a result, Hive has been able to expand onto an international stage in several key markets. Take Turkey as a prime example: Hive has already developed 11 megawatts of photovoltaic power generation plants. New markets are on the horizon too, including Serbia.
In short, the potential for UK businesses to have a real impact on the global renewables transition is immense. Yet, without adequate support, British businesses may struggle to fulfil their potential on an international scale.
By supporting businesses like Hive Energy, UKEF can work with partners within the renewables sector, to provide the support for them, facilitating them to follow opportunities they would otherwise miss out on. Together, we can increase access to renewables in new markets and position the UK as a driving force behind more sustainable world.
