Out-Law News | 05 Jun 2014 | 10:11 am | 2 min. read
Professional services firm Ernst and Young (EY) ranked the UK in 6th place in its latest Renewable Energy Country Attractiveness Index (40-page / 2.9MB PDF), which is published quarterly. This is the lowest ranking the UK has had since November 2012; and puts it below the US, China, Germany, Japan and Canada.
"The recent carbon tax freeze, an energy market competition probe and Conservative Party plans to scrap onshore wind subsidies post-2015 are weighing heavily on the sector's ability to assess the long-term outlook," said Ben Warren, EY's head of environmental finance. "In addition, the launch of a government consultation on future financial support for solar has taken the shine off the UK's otherwise booming solar market."
"As ever with the renewables sector, more damaging than the outcome of any review itself is the uncertainty it creates and the trust it erodes. This last quarter has been no exception, with little done to foster sympathy from the renewable energy sector, which appears to be continuously caught in the firing line," he said.
The UK does, however, remain the most attractive investment destination for offshore wind and marine energy projects, according to technology-specific rankings provided as part of the report.
Although the US continued to lead the rankings, the report found that second-placed China was "continuing to strengthen its hold" on the renewable investment market thanks to an increasingly more market-based approach. The Chinese government has recently doubled the amount of solar capacity it plans to install from 35GW by 2015 to 2017, according to the report, while the country is also expected to install nearly 100GW of wind power by 2018.
"New impetus has been injected into the Chinese market with even more ambitious renewable targets being introduced," Warren said. "The dual objectives of driving local manufacturing and tackling air pollution create an extremely favourable outlook, which is reinforced by a willingness of the Chinese government to open up the sector to provide greater competition, and therefore opportunity, for in-bound investors."
Outside of the top 10 investment and development destinations recorded by the report, EY said that African countries were continuing to "expand [their] presence in the global renewables market". Notable recent policy decisions included the decision by the South African government to award additional capacity under Round 3 of its national renewable energy procurement programme, boosting it from 19th to 17th place; and the financing of the Lake Turkana wind project in 37th place Kenya, described as a "critical milestone for large-scale clean energy project financing in Africa more broadly".
The report also featured Nigeria as a "market to watch" given its ambitious energy sector reform programme and news of a public-private project to develop 3GW of solar capacity in the country worth $5bn. Nigeria has set a renewable energy capacity target of 20% by 2030 and is in the process of developing a feed-in tariff (FiT) regime to support its ambitions, the report said.