The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

UK Not Doing Enough To Win Renewable Investors, Says Report

The UK is continuing to keep renewable energy investors at arms’ length by publishing key legislation in a piecemeal manner and backing shale gas at the expense of developing biomass.

That is the verdict of analysts at consultancy Ernst & Young (EY), who warn that the British government “is now playing catch-up with investors who are not short of opportunities in other countries."

EY says that policy announcements over the summer “may have improved prospects and contributed to increased levels of activity in the UK renewables sector, but are not enough to attract investment in the long term."

Those announcements included details of the government’s proposed contracts for difference – the prices it will pay generators of electricity under its Electricity Market Reform package – an extra £800 million (€928 million) for the recently-launched Green Investment Bank and the Energy Bill securing its passage through to the House of Lords.

However, EY states that many of these announcements were long overdue and do not go far enough to sustain current high levels of investor activity.

Ben Warren, Environmental Finance Leader at EY, said: “The flurry of government announcements has been welcomed with a sigh of relief by the sector. But what we are witnessing is nothing more than basic, isolated measures that had been stalled for way too long.”

He added that “much work is still needed to convert this patchwork of measures into a complete, balanced and strategic plan that will sustain activity in the long term."

Examining the contracts-for-difference strike prices, EY said that they appear “relatively attractive, particularly for offshore wind," but it stressed that the proposed rates are still subject to consultation and state aid approval and as such “the market will need more detail to fully assess the risks and rewards."

EY also highlights that dedicated biomass power plants were conspicuously absent from the strike price package and notes that the government’s “controversial move toward shale gas appears to be at the expense of biomass power, which arguably still has a critical role to play in expanding the UK’s low carbon base-load power."

And EY also concludes that the government’s failure to set a 2030 decarbonisation target has “undermined confidence in its commitment to renewable energy."

Warren said that while the UK still had the potential for “a liquid and buoyant renewables market… global investors and developers need more than piecemeal policy details."

“The government must come up with a credible and consistent energy plan that offers in a timely manner the clarity and information required to make long-term investment decisions."

He warned that “the government is now playing catch-up with investors who are not short of opportunities in other countries. This is no time for complacency, as important pieces of the jigsaw are still missing if we want to produce an attractive framework.”

Warren was speaking as EY today released its Renewable Energy Country Attractiveness Indices (RECAI), which does what it says on the tin – ranks countries on how attractive they are to investors in terms of their political and regulatory landscape.

The US and China retain the number one and two slots respectively, and Germany remains in third place, despite a bleak outlook for the renewables market.

EY states that despite strong public support for a green economy, rising political tensions ahead of next month’s election “are paralysing investment in the sector."

“Calls to reform the feed-in tariff scheme ignore the relatively small impact of new renewable plants on the consumer surcharge, while rhetoric about the ‘affordability’ of Germany’s energy supply has not translated into policy statements.”

Australia drops from fourth place to sixth – replaced by the UK – because of Prime Minister Kevin Rudd’s plans to scrap the country’s fixed carbon price a year ahead of previous proposals – a move EY states “would cost A$3.8 billion (€2.5 billion) and take the price of carbon from A$25 (€17) to just A$6 (€4), potentially delaying investments."

The RECAI also states that last year, €9.6 billion of renewable energy assets were sold by major utilities, representing a third of total merger and acquisition activity globally in 2012, with European utilities accounting for 87 percent – or €8.2 billion – of this divestment value.

EY notes that in the first quarter of this year, a further €1.5 billion has already been divested and it expects this trend to continue.

The report states that utilities “are increasingly looking to divestment, particularly of renewable assets, as a way of creating sustainable capital flows for reinvestment. This is driven by a need to keep debt under control in order to protect credit ratings and fund capital expenditure programmes in emerging markets and technologies.”

It adds that renewable energy assets “are likely to be the first class of assets a utility chief financial officer considers when contemplating capital recycling and divestments, driven by debate around core and non-core assets, and valuations."

Lead image: 3d small person running to a pound sterling sign.Isolated on white background. via Shutterstock

Untitled Document

RELATED ARTICLES

Coal plant

US Clean Power Plan Will Double Coal Plant Closures

Jim Snyder and Tim Loh, Bloomberg A new government analysis of President Barack Obama’s signature effort to fight climate change affirms what critics s...

The New Normal? Renewables, Efficiency, And “Too Much Electricity”

Clint Wilder, Clean Edge Just over a decade ago, the state of California faced serious concerns about whether its utilities could generate and...

Engineering Possibilities Versus Practical Implementation: Utility Portfolios and Business Models

Renewable Energy World Network Editors Europe’s utilities are re-evaluating their business models due to the energy transition. Members of POWER-GEN Europe’...

Bosnia and Herzegovina Power Market Outlook to 2030 - Market Trends, Regulation and Competitive Landscape

Pramod Dige The Report Bosnia and Herzegovina Power Market Outlook to 2030 - Market Trends, Regulation and Competitive Landscape ...

PRESS RELEASES

Array Technologies’ DuraTrack HZ v3 Continues to (R)evolutionize at SPI

Array Technologies, Inc. (ATI) prepares to showcase its recently launched tracking syst...

Appalachian's Energy Center assists counties with landfill gas to energy projects

The Appalachian Energy Center at Appalachian State University recently completed a proj...

Early Bird Registration Deadline for GRC Annual Meeting is This Week

The deadline for early-bird rates for registration for the biggest annual geothermal ev...

Redesigned HydroWorld.com Video Gallery

Hydropower news and information, and interesting promotional announcements are now avai...

FEATURED BLOGS

Transitioning to Net-Zero Living

Judith and Jeffrey adore living in Belfast, Maine – a quaint harbor town of Belfast, Maine. They previously res...

The True Cost of Electric Vehicles in Australia

In order to avoid increased congestion, further greenhouse warming and lessen Australia’s reliance on imported ...

The Coming Multi-trillion Dollar Energy Investment Drive

In coming years, a multi-trillion dollar low-emission energy investment drive will get underway. Three catalysts wil...

The Perfect Elevator Pitch

The elevator pitch is a concise statement that grabs attention and communicates value, ideally leading to a next step...

FINANCIAL NEWS

Kelvin Ross is Deputy Editor of Power Engineering International magazine and its associated publications – Middle East Energy and the Global Power Review. Previously, Kelvin was News Editor at UK online news site Energy Live News, Production Edito...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @jennrunyon

FEATURED PARTNERS



EVENTS

IREC 3iForum

Three days of insightful 30-minute sessions from IREC’s solar thou...

IREC 3iAwards

Join us at the 3iAwards ceremony at 4pm PDT Wednesday, Septemb...

5th Annual Hydro Plant Maintenance

Join maintenance professionals to discuss the challenges in maintenance ...

COMPANY BLOGS

Clean Energy Patents Maintain High Levels in First Quarter, Solar L...

U.S. patents for Clean Energy technologies from the first quarter of 201...

News from the Solar Frontline in Samoa

At the June session of the Advanced PV Project Experience: 5-day Worksho...

SAP for Utilities Blog

The Eventful Group produces the annual SAP for Utilites Conference ...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS