Attractiveness of UK for renewables investment slumps to No. 13 on world top 10 list

EY Investor Attractiveness Index
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levels of activity which has been attributed to developers rushing to meet deadlines before support for renewables is withdrawn.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.

In response to our ‘Name Your Top 3 Scottish renewable energy wishes’ you have said time and time again that you want government policy to be:

  • Consistent
  • Clear, and
  • Certain

If you want to contribute to the debate on SCOTLAND’S RENEWABLE FUTURE – along with Holyrood MPs from all parties – then come along and make your voice heard on Thursday, 26 May 2016 at the Edinburgh Centre for Carbon Innovation.

* SCOTLAND’S RENEWABLE FUTURE conference, 26 May 2016.

For more information:  http://www.scotlandsrenewablefuture.co.uk/

How Scottish Energy News broke the news in September 2015
How Scottish Energy News broke the news in September 2015

Ben Warren concluded: “Emerging markets – earlier in their renewables journey – are benefiting from cheaper and more efficient technologies, lower cost of capital and more reliable resource forecasting.

“The increasingly global flow of capital proves that investors that are becoming more comfortable with new markets. We expect to see massive deployment of low carbon investment in developing markets.

“Ambitious targets and low pricing alone will not be enough to promise investment attractiveness, however. The ability of markets to climb, or stay in, the Index will depend on projects being built, and commercial viability enabling the supply of affordable energy in a competitive environment.”

 

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