UK remains fourth most attractive country for renewables investment, despite mounting global competition

Pictured: Orsted apprentices at Hornsea Two offshore wind farm. Image: Orsted

EY has published its Renewable Energy Country Attractiveness Index (RECAI) every six months since 2003, with the 61^st edition out today (13 June).

The US has once again retained the top spot. Investors, EY has stated, continue to favour the US for the $369bn committed to tackling climate change through the 2022 Inflation Reduction Act. The Act set out new tax credit regimes for technologies such as clean hydrogen, electric transport and carbon capture.

EY has stated that the US has played a significant role in a 19% increase, year-on-year, in clean technology investment globally.

Taking second place is Germany, which has overtaken China for the first time. Germany last year committed to achieving 80% renewables in its power mix by 2030, sending a strong signal to the supply chain and to investors. It has increased the share from 41% to 46% in just 12 months.

China is now in third place, down from second, while the UK has retained its fourth-place spot from the previous RECAI edition. EY has acknowledged concerns about faltering renewable investment in the UK, attributable to factors such as Brexit and to a lack of long-term Government support for onshore wind and solar.

But the UK’s position has been maintained due to the UK’s recent decision to increase its Contracts for Difference (CfD) auction round allocation to £205m. Onshore wind will be included for the first time. This next auction will also set aside a record £35m for emerging technologies. The results are expected later this summer.

The UK’s high RECAI rating is also partly attributable to its target to host 10GW of green and blue hydrogen generation capacity by 2030, of which at least half should be green. It is in the process of developing a green hydrogen certification scheme, which is due for completion by early 2025 and which the UK is hoping to roll out globally.

Future opportunities

RECAI’s chief editor Ben Warren said: “While the UK remains an attractive destination for renewables investment, it faces increasingly fierce international competition as the US and EU step up their own policies to entice clean energy capital. To maintain and grow its market position, the UK will need to play to its strengths, which includes a relatively stable policy landscape when compared to the US.

“Over time, some of the Inflation Reduction Act’s current provisions will require extension or could be phased out, while UK policy tends to endure for longer periods and does not require constant renewal. If the UK government were to introduce its own competitive raft of clean energy incentives, investors could be confident that these would be in place for the foreseeable future.

“The UK should also look to address its perceived weaknesses. The planning system could be streamlined to accelerate the construction of major energy assets.”

MPs have heard evidence of renewable energy projects in the UK waiting up to 15 years for a grid connection. Moreover, the approval of every major offshore wind farm to date has been called in. Between 2012 and 2021 there was a 65% increase in the time it took for projects to go through the Nationally Significant Infrastructure Project (NSIP) process.

To tackle this issue, the Government is working with the National Infrastructure Commission and National Grid ESO on planning reform.

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