The lack of consistency and political miscommunication over key energy reforms has “damaged” the UK’s position as an attractive place for renewable energy investment.
In its latest quarterly global report ‘Renewable Energy Country Attractiveness Indices’ (CAI), experts at Ernst & Young said the UK has dropped to sixth place, topped by China, Germany and the US. The global analysts said the lack of agreement over decarbonisation targets has been key in the UK slipping from the top five spot.
Ben Warren (pictured), Ernst & Young’s Energy and Environment Partner said: “Political and regulatory uncertainty, working in tandem with constrained capital markets, continue to put the brakes on investment and deal volumes… The UK renewable energy market has been hit by mixed and inconsistent messages by policy makers. While investors are looking for ways to invest in renewables to secure future supply and predictably priced energy, political limbo has left them very cautious before committing further capital into the UK renewable energy sector.”
The news comes as the Government publishes the Energy Bill today, which is expected to help meet the UK’s energy demand and reach its carbon targets. Ernst & Young said there are “high hopes” for the Energy Bill to provide stability and certainty for investors, however, the failure to provide a decarbonisation target has been disappointing.
Mr Warren added: “We are now looking at the Government’s new Energy Bill to restore the necessary environment of stability and trust that will attract further investment. The significant increase in the Levy Control Framework (LCF) budget to £7.6bn is a step in the right direction. However, in order to satisfy investors looking to commit significant levels of capital to the UK energy sector, further questions around the implementation of the LCF need to be addressed.
“The inability to commit to decarbonisation targets before 2016, on the other hand, is a let-down and perhaps a sign of the continuing tensions within Government. With some policy-makers still seeing the expansion of gas plants as more critical to the country’s energy strategy, the prospect of a decarbonisation target is as uncertain as ever.”
Environmental group Greenpeace agreed the Government must set a target for the power sector to cut carbon emissions for investments to continue.
Policy Director Joss Garman said: “Ernst & Young are just the latest major business voice to warn that the Government’s infighting and prevarication over clean energy investment has harmed the UK economy and will continue to do so without serious certainty built into the new Energy Bill.
“The Government must agree to insert a green jobs amendment into the Bill that sets a legal goal to remove carbon from our electricity system by 2030. This is needed to avoid a looming potential investment vacuum after 2020.”