“Perfect storm” sees attractiveness of UK renewables fall
The UK’s appeal as a destination for renewable energy investment is at its lowest level for almost five years as a result of a combination of domestic and international factors, according to EY’s Renewable Energy Country Attractiveness Index.
The sector is currently weighing the impact of a recent consultation on solar subsidies that will see the UK Government withdraw Renewables Obligation support for solar projects above 5MW two years earlier than planned. In addition, the Government has already allocated the majority of the funding available to support renewable energy projects through to 2020.
Meanwhile, international competition is intensifying and new dynamic emerging markets are increasingly threatening the UK’s ability to attract investors.
Ben Warren, environmental finance leader at EY, comments: “What we are seeing is a ‘perfect storm’ of reasons prompting a fall in the appeal of the UK’s renewables market.
“The booming UK solar sector, one of only six markets globally to surpass the 5GW installed capacity, was caught by surprise by the Government’s consultation in May.
“Legal challenges and investor petitions have been launched in response, urging the Government to give the sector more time and greater policy stability to compete with conventional fuels.
“At the same time there is simply not much left in the pot. 60% of the funding available has already been allocated leaving investors and developers concerned about budgetary constraints for future projects.
“To continue to compete for international capital, the UK’s market reform and upcoming Contract for Difference regime will have to go a long way to repair the damage or recent policy mishaps.”