Britain is ‘on a landslide’ down the EY Investor Attractiveness Index
The UK’s attractiveness as a destination for renewable energy investment
has reached an all-time low (arrowed, left, in black)
The UK now ranks 13th out of 40 countries – behind Germany, France, Canada
and Australia – after crashing out of the Top 10 last year after the then
incoming Tory government launched a ‘bonfire of the subsidies’ for onshore
wind and, to a lesser extent, solar power.
Consequently, investment in new projects in the UK is expected to decrease
drastically from 2017 onwards, according to EY’s Renewable Energy Country
Attractiveness Index (RECAI), published today.
A combination of historic energy policy announcements that are now making
their impact felt and ongoing uncertainty surrounding the role of
renewables in the UK’s future energy mix, are undermining the sector’s
appeal in the eyes of investors, says the report.
Crashing out of the World Top 10 on the list last year triggered the
Westminster parliament’s Scottish Affairs Committee – chaired by SNP MP
Pete Wishart – to set up an inquiry into the Scottish renewables industry.
This is still ongoing.
The latest report cites the Government’s decision to opt for gas and
nuclear, instead of renewable energy, to fill an anticipated energy supply
gap as the key reason for the UK’s fall.
In addition, the early closure of the Renewables Obligation regime and the
end of Contracts for Difference (CfDs) after a single round have limited
the routes to market for electricity generated by onshore wind and solar
power, contributing to the UK’s decline in the rankings.
The RECAI goes on to warn that investment in new projects could also
decrease drastically from 2017, following current record levels of activity
which has been attributed to developers rushing to meet deadlines before
support for renewables is withdrawn.
Ben Warren, EY Energy Corporate Finance Leader said: “A non-committal
approach to energy policy is putting the attractiveness of the UK’s
renewable energy sector on a landslide.
“The current approach is going against the grain of almost universal global
support for renewables and is masking the UK’s advantages – a growing
energy imperative as ageing power plants are retired, strong natural
resources and efficient capital markets.
“In the absence of real changes to the direction of policy support and
greater demand for renewables in the energy generation mix post 2020, the
only way for the UK in our Index seems to be down.”
“The UK Government’s noncommittal, if not antagonistic, approach to energy
policy continues to go against the grain of almost universal global support
for renewables.
“Not only stalling project development and investment inflows, this is
arguably jeopardising UK energy security.”
Meanwhile, European markets appear to be scaling back their ambitions as
they address the challenges of marrying up increasingly mainstream
renewables with a legacy of centralised conventional power generation.
The US (1), China (2) and India (3) held their positions at the top of the
index with the size and scale of renewables activity surpassing other
countries.
Notwithstanding uncertainty over its Clean Power Plan, the US held its
position following the five-year extension of federal tax credits for wind
and solar. This provided critical certainty for investors and is forecast
to galvanise significant capacity deployment through to 2020.
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