A plethora of energy policy announcements in the past 12 weeks by the newly-elected UK government withdrawing support for renewable energy have seen the attractiveness of the UK’s renewables market as an investment destination drop out of top 10 countries to invest in.
For the first time, the UK has lost its top 10 spot in the EY Renewable Energy Country Attractiveness Index (RECAI), published today.
The UK is now ranked number 11 out of 40 countries in the index, where the top 10 now comprise:
This year alone, 23 large-scale projects representing around 2.7GW of energy have been publicly abandoned, putting a question mark over the long-term future for the UK’s renewable sector.
The report also points to the inconsistencies of the latest policy revisions as contributing to the UK’s dramatic fall.
Looking ahead, the Government’s latest policy revisions are expected to have a significant impact on onshore wind investment, according to the report. A combination of the early expiry of support for projects under the Renewables Obligation (RO) and the unexpected loss of revenues from levy exemption certificates are likely to impact both existing and future projects.
Ben Warren, Energy Corporate Finance Leader at EY, said: “Few in the renewables sector would disagree that falling costs mean many renewables projects – particularly onshore wind and solar PV – will be cost-competitive and subsidy-free within the next three to five years.
“However, by prematurely withdrawing support, the Government risks stalling or killing projects that would otherwise maintain the momentum to get the market to that critical point.
“Investors are currently trying to make sense of what seems to be policy-making in a vacuum, lacking any rationale or clear intent. Worryingly, this trend of inconsistent policy tinkering could also sour investor confidence in other areas, such as new nuclear, carbon capture and storage and shale energy, as well as offshore wind.”
“The UK renewables sector is at a crossroads. It can continue to fight this policy tinkering, or see this as an opportunity to throw off the shackles of policy dependency and establish itself at the forefront of unsubsidised renewables in Europe. The latter won’t be easy, but it may well be worth taking the risk.”