UK energy sector must be ‘more like China’

The UK Government must provide consistent messaging and 'fully align' energy and economic policy if it is to encourage investment and strengthen the renewables sector, says BDO's Tomas Freyman.

Uncertainty around energy policy over the past 12 months has frustrated the power sector, while regular amendments to regulation, such as cuts to the Feed-in-Tarriffs (FiTs), has stifled those with renewables plans, causing investors to look elsewhere.

Director of valuations, including energy project valuation, at BDO, Freyman says the lack of unity between Treasury and the Department of Energy and Climate Change (DECC) is stopping investment in the renewables sector and preventing the widespread use of ‘green’ technologies.

According to Freyman, the UK Government should look at how the Chinese Government is linking its economic policies to its energy plans.

Freyman said: “To keep the renewables sector growing the UK Government must provide consistent messages. A good example of this is China. Their energy and economic policies are completely aligned.

“So with regards to the energy sector we need to be more like China” he added.

In October, DECC was issued a damages claim from five solar installation and construction companies over the Government’s illegal cuts to Feed-in-Tariffs last year.

The organisations claim that the cuts to the Feed-in-Tariff, which were ruled ‘unlawful and unfair’ by the High Court, Court of Appeal and Supreme Court in Spring 2012, directly caused damage to solar installation businesses.

The renewables sector received another blow last week when Energy Minister John Hayes attacked onshore wind farms, calling them a “terrible intrusion”, and ordered new analysis on their effect on local communities.

Freyman said: “This Government does a great job of throwing a spanner in the works. Just last week the industry thought onshore wind energy is going to come to a screeching halt [following Hayes comments] and that’s the last thing any investor wants – any uncertainty related to the cash flows that they’re banking on”.

“The success of the energy sector currently relies on the availability of the resource, supply chain and the appropriate regulatory regime which drive returns. The state of these broad drivers determines which sectors flourish and at what pace”.
Leigh Stringer

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