Britain's renewable attractiveness at all-time low
The UK has fallen to an all-time low in EY's table of the world's most attractive renewable energy markets due to Brexit uncertainty, the demise of DECC, and the approval of the Hinkley Point C power station.
The US, China and India all held their positions as the top three of EY’s Renewable energy country attractiveness index (Recai), with the size and scale of renewables activity surpassing other countries.
The UK has dropped to 14th place, one place down on the last report in May. The approval of the world’s largest offshore wind farm was not enough to keep the UK ahead of countries such as Australia or Morocco, as Britain continued to lose its appeal in the eyes of investors.
EY’s head of energy corporate finance Ben Warren said: “Continued uncertainty around the Government’s energy policy has created a confusing picture for investors seeking a low-risk return.
“In addition to radical changes to its structure, the Government has decided to press ahead with investment in forms of energy that either don’t seem to have the public’s backing, such as shale gas, or have been deemed costly.
“With one more big decision, this time on the future of untested tidal lagoon technologies, expected in the coming months, the Government clearly believes that easy to deploy and cost efficient technologies such as onshore wind and solar are not the answer to the UK’s energy security conundrum.”
Reasons to be cheerful
The last few months has seen a growing number of companies participating in demand response via peak avoidance mechanisms in the UK, which EY highlights as a simple way to get a significant reduction in transmission charges.
In August, National Grid awarded seven firms four-year contracts to provide balancing services to the network in the UK's first 200MW Enhanced Frequency Response (EFR) auction. Government support for energy storage has been touted as a pathway for the UK to become a world-leader in the global low-carbon transformation.
“The last 12 months have seen a significant increase in investment in battery storage technology in the UK,” Warren added. “The availability of contracts and continued research and development investments, particularly in the US, will continue to drive down costs and improve returns from investment in battery storage.
“No doubt there are still challenges to be overcome and questions to be answered around affordability and availability. But if the market is ready and willing to innovate, battery storage, coupled with renewables, can help improve reliability and consistency of output to create a far more attractive sector.”
Britain’s fall in these rankings will come as no surprise to many. Many green groups and businesses fear that it is a matter of time before consumers are subject to rising installation prices leading to a slowdown in investment, with suppliers already claiming that the Brexit vote is negatively impacting the sector. The uncertainty will not be helped by Defra Secretary Andrea Leadsom’s announcement yesterday (25 October) that around a third of green regulations "won't be easy to transpose".
Meanwhile, concerns exist over the uncertain future of the UK’s low-carbon energy security. The Government’s decision to give the go-ahead to the Hinkley Point C nuclear power station in Somerset and approve shale gas exploration has drawn outrage from local groups, environmentalists and politicians.
Industry figures have also expressed fears that the recent removal of DECC will leave climate change "swept under the rug", however the appointment of Greg Clark to run the new BEIS department has been welcomed by many observers.