UK will lose top spot for renewables if offshore finance fails

The UK and Spain continue to vie for top spot as the world's most attractive national environments for renewable energy investment, according to the latest quarterly Ernst & Young index.

The two countries have jostled for position since the index was launched in February 2003, with the UK narrowly taking top spot in the previous index at the start of this year (see related story).

However, Jonathan Johns, Ernst & Young's head of global renewable energy warned that, while both countries had been affected by adverse market conditions of late, the UK in particular could slide down the scale if development momentum does not pick up in both onshore and offshore wind.

"The UK has recently been hit by increased costs under the government's revised business rates regime for renewables; and increases in transmission use of system charges with the introduction of BETTA. Both of which are likely to hit Scotland hardest."

"The UK's position in the table could change dramatically over the nest year if onshore build rates and offshore momentum do not pick up," he continued. "The slow progress in the development of offshore projects to date has been frustrating for some commentators, but there are projects up and running that are vital to establishing an understanding of the risks and costs involved."

However, he remained optimistic about the investment potential for renewables in the UK, saying that the banks' appetite for offshore wind has grown over the last few years and they are ready to "put their money on the table".

"The UK government has indicated that the power sector will carry the burden of any decrease in its EU emissions allowances, which means that high carbon prices could drive large energy companies' interest in renewable energy project development and acquisition," Johns said.

"As power sector players come to terms with the need to reduce emissions, renewable energy - wind in particular- has a firm seat at the energy table. But, it cannot be complacent. Nuclear is lurking in the wings with pebble bed technologies from China and more conventional technologies from France and the US raising attention."

Indeed China, along with Canada and India, is tipped to become the next major renewable market, as government support mechanisms slot into place and manufacturers set up local plants in anticipation of the country's huge market potential.

The US is also another outside threat to the UK's position at the top of the table. The report places it in third position despite development rates taking off under the new Production Tax Credit (PTC), but industry confidence in the scheme remains low and the boom and bust cycle looks set to continue.

However, Johns believes that if policy confidence could be established, the US could re-establish itself at the top of the table.

By David Hopkins


| renewables


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