Renewables uncertainty puts investment in doubt

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It has potential to flower – but it’s still budding at the moment…

Uncertainty surrounding the level of UK Government support for renewable energy projects is raising questions over investment, according to a new report.

The latest edition of the energy investment map by PA Consulting Group blamed the uncertainty on availability of funding but also on calls for the level of carbon price support to be frozen.

While the map found that renewable technologies look “highly attractive”, the uncertainty means the investment case is “unlikely to continue indefinitely”.

Instead, PA said “gas is no longer the bad guy of the UK energy investment market” despite “poor operating margins for gas-fired generation in recent years”.

Mark Livingstone, an energy expert at PA, said:

“The UK has the potential to deliver excellent opportunities for investors in the coming years, but a big question remains around what they should invest in.

“As Electricity Market Reform, which aims to attract investment to replace the UK’s ageing energy infrastructure, has now passed into law, 2014 promises to give investors a greater level of clarity and certainty. The results from PA’s map indicate that gas could be the one to watch over the coming years.”

Fellow PA energy expert Olaf Remmler added:

“Investors in energy generation must contend with significant uncertainty, complex market and regulatory conditions and the rapid advance of renewable technologies.

“To make the right decisions, they need to understand the regulatory and economic factors affecting their projects and investments.”

In the offshore renewables market, Denmark has taken the lead from China and is expected to generate 50% of electricity from wind by 2020.

China has been knocked into third place by the Philippines, where the potential for new capacities and a robust market environment with feed-in tariffs for hydro, biomass, wind and solar projects means the country has risen from fifth spot and is a key target for renewable energy investors.

Other countries appearing at the top of PA’s ranking are Austria, Sweden and the UK.

Renewable projects are becoming more attractive in several European countries due to the improving economic and financial situation, allowing room for fiscal policies to support the renewables sector.

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