The attractiveness of the UK renewables market in the eyes of investors and developers has decreased dramatically – falling back to levels last seen in November 2012, according to the latest Renewable Energy Country Attractiveness Index.
The quarterly report – which ranks the investment potential of 40 countries’ renewables markets – has put the UK in 6th place behind the US, China, Germany, Japan and Canada, falling again for the second time in a row.
This is mainly due to conflicting signals from the UK government over the future of support for renewables beyond the 2015 election, as well as the proposed cap on solar power projects eligible for Renewable Obligation support being introduced two years earlier than planned.
At the same time, a new auction program for utility-scale renewable energy supports Canada’s move up into fifth place. And in the Far East, China, Japan and India continue to strengthen their positions and close the gap on their Western counterparts in the top 10.
Ben Warren, EY Environmental Finance, commented: “The UK has slipped to sixth place for the first time in more than a year. Policy tinkering and conflicting signals once again become too much for investors and developers to handle.
“The recent carbon tax freeze, an energy market competition probe and Conservative Party plans to scrap onshore wind subsidies post 2015 are weighing heavily on the sector’s ability to assess the long-term outlook.
“In addition, the launch of a Government consultation on future financial support for solar has taken the shine off the UK’s otherwise booming solar market.
“As ever with the renewables sector, more damaging than the outcome of any review itself, is the uncertainty it creates and the trust it erodes. This last quarter has been no exception, with little done to foster sympathy from the renewable energy sector, which appears to be continuously caught in the firing line.”
The London-based accountancy and audit company does not produce an international country renewable energy attractiveness rating for Scotland.
China continues to develop
China continues to strengthen its hold on second place. Increasing signs of a more market-based approach in China, both in the renewable energy sector and the economy more broadly, are pushing various forecasts to eclipse the US in wind and solar by the end of the decade. China is projected to add nearly 100GW of wind power and 60GW of solar power by 2018.
Warren added: “New impetus has been injected into the Chinese market with even more ambitious renewables targets being introduced. The dual objectives of driving local manufacturing and tackling air pollution create an extremely favorable outlook, which is reinforced by a willingness of the Chinese Government to open up the sector to provide greater competition, and therefore opportunity, for in-bound investors.”
A spokesman for a UK renewable energy industry association commented: “It’s clear from this report that the UK is losing out on vital opportunities for investment and jobs because the Government is inflicting serious damage on this country’s onshore wind industry by driving investors away.”