The UK has fallen from fourth to fifth in the latest report from consultancy firm EY showing how attractive a country is for renewable energy investment. Political uncertainty and “mixed signals” have led to a decrease in investor confidence and potentially puts £330 billion of investment at risk.
The February 2014 Renewable Energy Country Attractive Index notes that the cancellation and downsizing of five major offshore wind projects has reinforced economic, technical and political challenges for investors. Proposals that would see mature technologies, such as onshore wind and solar, compete for Contracts for Difference (CfD) have also had an impact.
The report adds, “The worrying lack of clarity on the government’s long-term energy strategy comes at a time when energy security is a concern and investors are looking to commit.”
Both the Renewable Energy Association (REA) and Greenpeace have blamed a lack of certainty around government targets for the UK slipping down the rankings. Joss Garman, deputy political director of Greenpeace UK, commented that “internal squabbling” and “foot-dragging” from the government when it comes to renewables has led to investor uncertainty.
“As other major economies like the US and China are embracing clean tech and reaping the rewards by attracting investment, the UK is failing to capitalise on its position as a world leader in green tech,” he added.
Meanwhile, Nina Skorupska, chief executive of the REA, explained that investors were already looking at projects post-2020 but that the lack of clarification from both the UK government and the EU was deterring them.
Mark Hoskin, a financial adviser at London-based Holden & Partners, also stated that since the feed-in tariff regime for solar from 2009 to 2011, there has not been a great deal of opportunity for investors interested in illiquid renewable projects.
Hoskin said “There has not been a lot for the UK investor to shout about under the coalition to invest in renewables. Indeed any new initiative which involves financial incentives seem to have all been to the hydro-carbon industry.
“George Osborne and David Cameron gave the oil industry in the North Sea a £3 billion tax break in March 2012 and a 24% tax break on the development costs of shale gas in the autumn statement.”
He concluded, “It is not a surprise that we are falling down the scale in regard to renewables.”