UK slips down renewable energy investment ranking after subsidy curbs
The attractiveness of the UK as a place to invest in renewables has fallen dramatically following Government moves to curb subsidies for clean technology, a report suggests.
The latest quarterly assessment by EY has seen the UK drop out of the top 10 for places to invest in renewable energy for the first time, slipping from eighth in June to 11th in the new Renewable Energy Country Attractiveness Index (RECAI) report.
Announcements ending or curbing support for onshore wind, smaller scale solar farms and domestic and community scale renewables suggest the Government has "sentenced the UK renewables sector to death by a thousand cuts", the report said.
This year 23 large-scale projects representing around 2.7 gigawatts (GW) of energy capacity have been publicly abandoned, EY said.
The policy revisions are likely to have a significant impact on investment in onshore wind into the future.
While offshore wind, in which the UK is a world leader, is not directly affected by recent announcements, the proposals and lack of clarity over long-term energy strategy could create enough uncertainty to trigger an exodus from the UK market.
It could even sour investor confidence in other areas including new nuclear reactors, technology to capture and permanently store carbon from power stations and industry underground, and shale gas, the analysis suggests.
Ben Warren, energy corporate finance leader at EY, said falling costs would mean many renewables projects, particularly onshore wind and solar electricity, will be cost-competitive and subsidy-free in the next few 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," he said.
And he warned: "Investors are currently trying to make sense of what seems to be policy-making in a vacuum, lacking any clear 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 gas, as well as offshore wind."
He suggested the UK renewables sector could either fight the policy tinkering or attempt to establish itself at the forefront of unsubsidised renewables in Europe, which "won't be easy, but it may well be worth taking the risk".
In contrast to the UK, President Barack Obama's clean power plan has given a clear steer on the US's long-term energy strategy, and has seen it return to the top of the league table, knocking China back into second place.
India is third and Germany fourth, while France and the Netherlands are the other European countries in the top 10, the EY report found.
Industry body RenewableUK's deputy chief executive Maf Smith warned investors were saying the Government had not set out a clear energy policy and did not see the UK delivering cuts to carbon emissions at the lowest cost.
"Onshore wind is already the lowest-cost low-carbon option and offshore wind is ahead of target in its cost reduction efforts.
"But without long-term clarity, projects will be delayed, investment will go elsewhere and consumer savings will be lost."
He added that confidence in offshore wind and wave and tidal schemes remained high and there was hope the Government would back them.
A Department of Energy and Climate Change spokesman said Government support had driven down the cost of renewable energy significantly, but ministers were taking action to control renewables spending to keep consumer and business bills as low as possible.
"The UK still remains an attractive location for investment in energy and we have continued to be the global leader in offshore wind investment.
"Subsidies funded via bill-payers have contributed to renewables making a record contribution to our electricity generation in the first quarter of this year and have nearly trebled our renewable electricity capacity in the last parliament alone," he said.