Evidence of the detrimental effect recent government policy announcements are having on investor confidence across the renewable energy sector has been published in two surveys by Ernst & Young (EY).
The UK slipped from eighth to 11th in the firm’s quarterly renewable energy country attractiveness index, having being overtaken by Brazil and Chile. It is the first time the UK has been outside the top 10 as a raft of policy measures left investors “baffled” and threaten to “paralyse the historically attractive UK renewables market”, the report says.
Another EY report conducted on behalf of wind industry body Scottish Renewables says banks have become reluctant to finance onshore wind projects in the aftermath of the decision by Department of Energy & Climate Change (DECC) to remove the Renewables Obligation (RO) a year early.
More than half of lenders surveyed are concerned by the political and regulatory risk around the RO changes and suggest they will not lend until the UK Energy Bill receives royal assent and becomes law, which is likely to be next year.
“Those banks that have indicated they are considering lending to UK onshore wind RO projects are now seeking better terms and some form of mitigation against a situation with no RO revenue,” says Matthew Yard, assistant director at EY. “As we move closer to the RO accreditation end date, the ongoing uncertainty makes it harder for projects and sponsors to raise senior finance”.
Scottish Renewables senior policy manager Michael Rieley says about two gigawatts of onshore wind projects in Scotland have been put at risk by the decision to end RO support early.
“If we are to avoid losing the benefits of this scale of development in Scotland, the UK government must allow those developers that have already made significant progress with their projects to continue them as part of the RO scheme.”