The British renewable energy industry has continued to lose its appeal in the eyes of investors, dropping to a new all-time low in the list table of the world’s most attractive renewable energy markets.
Uncertainty caused by the vote in favour of British Independence from the EU-bloc, the abolition of the dedicated UK government Department for Energy (DECC) and the approval of the Hinkley Point C new nuclear power station have seen the UK fall for the first time to 14th place (from 13th in 2015) in the EY Renewable Energy Country Attractiveness Index (RECAI)
The approval of the 1.8GW Hornsea wind farm highlighted the offshore wind industry’s potential, but it was not enough to keep Britain ahead of the likes of Morocco, which has for the first time climbed ahead into 13th place.
After crashing out of the world Top 10 renewable energy investor-attractive nations last year, the SNP led Scottish Affairs Committee in the House of Commons launched an investigation into the impact of British government policies on Scotland’s renewable energy sector.
Growth in Scottish renewables is hampered by investor uncertainty over UK Govt. policy U-turns – MPs report
Ben Warren, EY Head of Energy Corporate Finance, commented: “Continued uncertainty around the government’s energy policy has created a confusing picture for investors seeking a low-risk return.
“In addition to radical changes to its structure, the government has decided to press ahead with investment in forms of energy that either don’t seem to have the public’s backing, such as shale gas, or have been deemed costly.
“With one more big decision, this time on the future of untested tidal lagoon technologies, expected in the coming months, the Government clearly believes that easy to deploy and cost efficient technologies such as onshore wind and solar are not the answer to the UK’s energy security conundrum.
“These moves, coupled with the uncertainty caused by Brexit, have dealt a blow to the country’s already floundering renewable energy sector and its attractiveness in the eyes of investors.
“The UK’s renewables sector faces an unknown future as the country negotiates its future relationship with the EU, and <Prime Minister> May’s new administration comes to grips with a power sector in turmoil.”
The UK’s standing was at odds with other EU countries which regained ground after falling behind emerging markets in the previous Recai in May 2016.
In the Top 10, even nuclear-dominated France moved up one position to rank 7th as a result of the country’s plan to tender for 3GW of new solar capacity over the next three years. Construction of a factory to produce solar panels to pave 1,000km of road work is also currently underway in the country.
Belgium, Sweden, Ireland, Norway and Finland also climbed further up the ranking of 40 countries. In Norway, work on a $2.3 billion undersea tunnel to Germany offers a new wind-hydro storage opportunity between the countries.
Germany, in addition to the United States, China, India and Chile, remained unmoved in the index top five.
However, the emergence of the battery storage market offers the potential to boost investment, according to the RECAI report.
Warren added: “The last 12 months have seen a significant increase in investment in British battery storage technology.
“The availability of contracts and continued research and development investments, particularly in the US, will continue to drive down costs and improve returns from investment in battery storage.
“No doubt there are still challenges to be overcome and questions to be answered around affordability and availability. But if the market is ready and willing to innovate, battery storage, coupled with renewables, can help improve reliability and consistency of output to create a far more attractive sector.”
Meanwhile, prior to uncertainty caused by the UK’s decision to exit the European Union, Europe experienced the greatest share of renewable energy green bond activity. A total of US$54.9b in renewable energy green bonds were issued in Europe since 2007, followed by North America with US$19.8b and Asia with US$4.5b.
Warren said: “The green bond market is enabling corporates, banks and development finance institutions to tap into enormous demand among investors for clean energy projects. In the last few years, we’ve seen significant growth in green bonds sold by issuers with plans to direct proceeds to environmental ends.”