Energy investors are underwhelmed by the UK renewable energy market due to a vacuum in policy direction for the industry’s future.
EY’s latest attractiveness index has ranked the UK market in the top ten countries globally for new investment - but the advisory firm said the move up from 14th place last year follows major blows in other countries, rather than progress in the UK.
Four years ago the UK market was ranked fourth globally but has steadily fallen down the ranks after a series of political blows to subsidy levels. The exception to the gloomy outlook for renewable energy investment is offshore wind power.
In April the UK kicked off the second round of renewable energy auctions for Contracts for Difference (CfD) subsidies which allocates £730m of annual funding over three rounds.
The current round includes £290m which is likely to be scooped up by offshore wind farm developers after driving down costs quicker than expected.
Ben Warren, EY’s head of energy corporate finance, said question markets linger over renewable energy targets, subsidies and connections with mainland power markets following Brexit.
“Unfortunately, the likelihood of getting complete answers to those questions before the UK exits the EU are slim,” he said.
“The UK continues to underwhelm investors who are waiting to see if future UK policy will support and encourage the renewable energy industry towards a subsidy-free environment, where consumers can benefit from the UK’s excellent natural resources for renewable energy,” he added.
Emma Pinchbeck, executive director at Renewable UK said the market has managed to deliver smart, modern infrastructure even “in challenging times”.
“It is to the industry’s credit that this activity has also made the UK a player in the global clean energy transition. The next Government should throw its weight behind renewables if it wants to secure the benefits of being a global leader in this exciting industry,” she added.
At the top of the leader board, China and India both usurped the US which fell to third position. China topped the index after announcing plans to spend $363bn (£280bn) developing renewable power capacity by 2020.
Meanwhile, India’s government is pushing forward plans to build 175 gigawatts of renewable energy generation by 2022 to reach its target of renewables making up 40pc of installed capacity by 2040.
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