‘Political point-scoring hampers UK renewable investments’ – Ernst & Young

Renewable energy investments at political risk
Renewable energy investments at political risk

Ernst & Young – one of the global Big Four accounting and business advisory groups – today warns that political squabbling potentially harms investment in UK renewable energy markets and technologies.

Its latest Renewable Energy Country Attractiveness Index Report warns that while energy affordability is becoming a major political issue in mature markets such as the UK, emerging markets are becoming increasingly attractive to renewable energy investors looking for stable policy environments.

It added that the US, UK, Germany and Australia are experiencing ‘delayed investment, abandoned projects and market-exits’ due to political intervention. In contrast, Emerging Markets are reaping benefits of clear policies with growing project pipelines.

Gil Forer, Head of Ernst & Young’s Clean-Tech unit, added; “When looking at markets from an investment perspective, we’re seeing a gap developing in terms of attractiveness.

“Governments must work harder to create stable markets in order to secure energy investment. The climate change talks currently taking place in Poland highlight the significant added value of renewable energy from economic, social, and environmental perspectives; which can only help to focus governments’ attention further.”

“Markets experiencing delayed investment, abandoned projects and market exits due to political interventions include Australia, where the new government is drafting legislation to abolish the country’s carbon pricing mechanism in 2014. “In Germany, which is placed third in our index, Chancellor Merkel is facing pressure from the energy sector to re-examine the renewable energy subsidies.

“Meanwhile in the UK, political point-scoring on rising consumer energy bills only heightens uncertainty for investors.”

Looking ahead, Forer warns; “Political indecision and complacency over mature technologies could seriously hinder the evolution. However, while certain markets stumble, the future is looking very bright indeed for those markets which can deliver stable energy policy and investor confidence.”

And Ben Warren, Energy Partner at EY added: “In the medium to long term, as the renewable energy market reaches grid parity and is no longer hostage to the uncertainty of government-controlled tariffs, it seems likely that the public equity markets will once again start to believe in the renewable energy supply chain and fast-growing and profitable development companies.

“Pension funds – which manage approximately $28 trillion in global asset – are becoming increasingly attracted to long-term predictable yields offered by projects based on mature technologies such as solar power and onshore wind.”

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed