UK re-enters top 10 for renewables attractiveness
The UK has restored its position as one of the top 10 countries for renewable energy investment, although concerns remain about the impact that Brexit will have on future investments.
The latest Renewable Energy Country Attractiveness Index (RECAI) from consultants EY sees the UK climb into tenth position for attractiveness for renewable investment, after sliding from fourth place in 2013 to an all-time low of 14th in 2016.
EY’s head of energy corporate finance Ben Warren said: “The UK’s reappearance in the RECAI top 10 is the result of other countries falling away – notably Brazil which cancelled a wind and solar auction in December - rather than any particularly encouraging resurgence.
“The UK continues to underwhelm investors who are waiting to see if future UK policy will support and encourage the renewable energy industry towards a subsidy-free environment, where consumers can benefit from the UK’s excellent natural resources for renewable energy.”
EY found that the UK investment environment had settled in recent years, following a plethora of subsidy cuts. Specifically, the UK Government plans to allocate £730m in funding through the Contracts for Difference (CfD) subsidies, which opened up for renewable energy auctions last month.
However, Warren suggested that CfD allocations were “modest” and that it would be a long time before the UK found itself back amongst the front-runners of renewable energy investment. The RECAI noted that the UK is behind schedule to meet 2020 EU renewables targets, although it welcomed the decline of coal-fired power, which even reached zero output for a day in April.
According to RECAI, the falling costs and advances in technology in the offshore wind industry, which is viable for the CfD auctions, represent the UK’s best chance of enticing future investment post-Brexit. However, EY highlights concerns about the lack of clarity surrounding the UK’s approach to renewables in the build up to its departure from the EU.
Elsewhere on the index, both China and India have surpassed the US which fell to third following policy changes introduced by the Trump administration. A number of executive orders have been introduced to stimulate growth in the US coal industry and review the US Clean Power Plan.
In contrast, China has committed to spending $363bn on renewable power capacity by 2020, helping to create 13 million new jobs, and India plans to build 175GW on renewable energy generation by 2022.
Both China and India are predicted to overachieve on their Paris Agreement pledges, the Climate Action Tracker (CAT) claimed on Monday (15 May).
As negotiations continue in Bonn, the US has delayed its decision on whether to withdraw from the Paris Agreement, a decision that removes the US from a leadership position on climate, according to CAT.
Commenting on the claims from CAT, Climate Analytics’ Bill Hare said: “Five years ago, the idea of either China or India stopping—or even slowing—coal use was considered an insurmountable hurdle, as coal-fired power plants were thought by many to be necessary to satisfy the energy demands of these countries. Recent observations show they are now on the way toward overcoming this challenge.”