UK holds sixth spot in quarterly Renewables Attractiveness Index, but consultancy warns industry still being undermined by policy uncertainty
The UK has retained its position as the sixth most attractive country for investment in renewables, according to the latest update on Ernst & Young's quarterly index. But the consultancy giant has also today warned that policy uncertainty is continuing to undermine investor confidence across the clean energy sector.
The latest publication of the company's global Renewable Energy Country Attractiveness Indices ranks the UK in sixth place, behind China, Germany, the US, India and France.
However, Ben Warren, Ernst & Young's environmental finance leader, told BusinessGreen that the UK had missed out on climbing the international league table after the publication of the government's long-awaited Energy Bill failed to deliver prospective investors promised policy certainty.
"The Energy Bill was much heralded, much promised and much lauded," he said. "But despite a lot of noise it does not live up to expectations. There is still a lack of clarity on the strike prices for the contract for difference mechanism and now there is a delay on the decision about whether there will be a decarbonisation target. That long-term certainty is still missing at a time when the UK market is struggling to attract investment."
He added that the Energy Bill was based on a "commendable objective" of delivering long-term investment certainty for the nuclear, renewables and gas sectors, but warned that investors were still waiting for that certainty to be delivered through the confirmation of strike prices later this year, and details on the support that will be made available through the capacity mechanism.
He also said that investors were particularly disappointed by the political compromise that has resulted in the government delaying its decision on a decarbonisation target for the power sector until after 2016 – a decision that a cross-party group of MPs is seeking to overturn through an amendment to the Energy Bill. Warren said the delay "cast doubts over the UK's commitment to cut carbon emissions 50 per cent by 2027 and left investors with a sense of uncertainty".
However, Warren argued the UK renewables sector could still see a significant spike in investment as soon as the government resolves the outstanding policy uncertainties.
"The UK market still has some sound fundamentals," he said. "Not least energy security – being an island at the end of a long chain of energy imports means we are going to need renewables in the long term. Shale gas can provide some breathing space, but it's not a silver bullet.
"The UK has to embrace renewables and it has some great resources to exploit, particularly in wind and marine."
The indices delivered good news for Japan, which rose one spot to seventh on the back of improvements to its renewable energy policy regime.
And the report also highlights improvements to the UK's solar feed-in tariff scheme, including improved support for larger scale solar farms and roof-mounted arrays, which it argues will help drive investment in the sector.
A spokesman for the Department of Energy and Climate said the government welcomed a report that "firmly places the UK as one of the leading places to do business in renewable energy in Europe, and the wider world".
"The landmark Energy Bill enables Government to set a decarbonisation target for 2030, and is designed to attract £110bn of private investment in secure, low carbon and affordable clean energy that supports jobs and growth across the country," he added.
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