Political miscommunication and lack of consistency over key power reforms have damaged the UK’s position as an attractive place to invest in renewable energy, according to a new report.
Ernst & Young’s quarterly global Renewable Energy Country Attractiveness Indices was published yesterday as UK Energy Secretary Ed Davey was unveiling the Energy Bill in the House of Commons.
The indices score 40 countries on the attractiveness of their renewable energy markets, energy infrastructure and suitability for individual technologies.
During the third quarter of this year, China remained at the top of the All Renewable Index, but the US dropped from second place to third, being replaced Germany. India was fourth, France fifth and the UK fell a place to sixth.
Ben Warren, Ernst & Young’s energy and environment partner said of the UK’s position: “Political and regulatory uncertainty, working in tandem with constrained capital markets, continue to put the brakes on investment and deal volumes. Looking forward, market restructuring and the emerging secondary infrastructure financing market are likely to provide the momentum for future investment.
“The UK renewable energy market has been hit by mixed and inconsistent messages by policy makers. While investors are looking for ways to invest in renewables to secure future supply and predictably priced energy, political limbo has left them very cautious before committing further capital into the UK renewable energy sector.
He said all eyes were now on the Energy Bill “to restore the necessary environment of stability and trust that will attract further investment”.
He added that “the significant increase in the Levy Control Framework budget to £7.6bn is a step in the right direction”, but “the inability to commit to decarbonisation targets before 2016 is a let-down, and perhaps a sign of the continuing tensions within government”.
“With some policy-makers still seeing the expansion of gas plants as more critical to the country’s energy strategy, the prospect of a decarbonisation target is as uncertain as ever.”
Ernst & Young also compiles wind and solar indicies and the solar list includes Saudi Arabia and the United Arab Emirates for the first time, reflecting the growing presence of the Middle East within the clean energy market. The UAE was ranked 35th (out of 40), two places above Saudi Arabia.
The roll-out of solar initiatives has already started in the UAE, placing it over Saudi Arabia in the solar index, while in the longer term Saudi Arabia may overtake – based on the sheer scale of ambition and the abundance of natural resource.
To see all the indicies click here