UK renewables policy needs clarity to increase investor confidence
The UK Government's lack of clarity over renewables policies is continuing to disrupt investor confidence, according to Ernst & Young's latest quarterly global renewable energy report.
The professional services firm said a number of UK policy and subsidy announcements made during the second quarter of 2012 have fallen short of delivering certainty for investors.
Ernst & Young’s said the continuing battle within the coalition government between a pro-gas stance, and the more pro-renewables view is undermining the rhetoric that the UK energy market is a great place to invest.
Energy and environmental finance leader for Ernst & Young’s, Ben Warren, said: “The lack of clarity and detail from various policy announcements, and the ambiguous messages coming out of the Treasury and DECC, has been frustrating for the renewable sector.
“More importantly, the on-going uncertainty risks delaying much needed investment further, undermining the UK’s ability to achieve its 2020 targets and benefit from the creation of green collar jobs”.
The report looks at the UK’s recent policy decisions and draws on the Government’s announcement that gas is higher on its agenda than previously thought.
The report states: “Over recent months, it has become more apparent that the Government is beginning to favour a dash for gas to deliver energy security, and will prioritise decarbonisation of the energy sector in the 2030s, a decade later than planned. If this is the case, it smacks of yet another example of leaving it to the next generation to pay for our ways.”
However, it also touches on the Government’s decision to boost wave and tidal projects, particularly the capacity increase to the country’s offshore wind pipeline.
The Department of Energy and Climate Change (DECC) also gave the go-ahead to Centrica’s 580MW Race Bank project and Warwick Energy’s £1.5bn 560MW Dudgeon development. It also mentioned that in mid-July, Centrica and Dong submitted initial proposals for a giant 2.2GW offshore wind farm in the Irish Sea between Anglesey and the Isle of Man.
In response to the report, a DECC spokeperson told edie: “We are clear on our commitment to renewable energy as part of a balanced energy portfolio and recently set out support levels for renewable technologies to help ensure that rapid growth in renewable energy continues.”
However, the report added that these positive developments have been partially offset by the announcement that Danish wind turbine manufacturer, Vestas, cancelled its plans to build a factory in the UK to produce its 7MW offshore turbines, leading to speculation that foreign investors remain sceptical about the Government’s commitment to the offshore wind sector.
In 2011, Ernst & Young’s released a report that mirrors todays concerns, as a year ago investment in energy reduction measures were ‘in danger of grinding to a halt’ as a result of a continued lack of understanding.
Despite dropping half a point, the UK has risen to fifth place in Ernst & Young’s All Renewable Index (ARI), due to a fall in Italy’s ranking in response to the countries worsening economic conditions.