Monday 28 February 2011

Cuts hit renewable investment

A report released today has shown that some countries and technologies are finding current economic conditions extremely challenging and it could have a negative impact upon the future of UK renewables.

Despite investment in new technologies hitting record levels, Ernst & Young's latest global Renewable Energy Country Attractiveness Indices will send a warning to the Government that spending cuts are undermining a low carbon future.

Ben Warren, Ernst & Young's Energy and Environmental Infrastructure Advisory Leader: "Where energy policy is less directly linked to job growth in the clean energy sector, we are finding Governments and policy setters increasingly focused on delivering a low carbon economy in the most affordable manner, possibly at the cost of longer-term economic value. Time will tell whether white flag waving, in terms of CO2 reduction ambitions and the pursuit of investment, in some of the more mature renewable energy markets will prove costly."

Although globally new investment in clean energy climbed by 30% in 2010 to US $243 billion with China seeing a 64% capacity increase in offshore wind, the general consensus is that conditions are challenging, leaving the market in a state of flux.

The report mentions the highlight of UK policy resulting in the Electricity Market Reform consultation, but said that the accelerated review of the Feed-in tariff, less than twelve months after its introduction is confusing for investors.

Ben Warren added: "Whilst the UK Government can be commended for starting to create an energy market that reduces risk to investors, there is some uncertainty as to whether the new proposals will encourage competition and create a level playing field for investors. There is also concern over whether the proposed arrangements may end up too complex for investors to navigate."