Monday 5 October 2015

UK changes in energy policy ‘increase regulatory risk’

UK changes in energy policy ‘increase regulatory risk’

The recent changes in energy policies announced by the Tory government would have a negative impact on current renewable assets.

A report from rating agency Moody’s stated although the country has been a “relative safe haven” for renewable investors with transparent regulation and support from policies designed to promote decarbonisation, recent changes may risk regulations.

The government’s decision to remove renewables from the Levy Exemption would be economically negative for the sector, it stated

It added: “The implementation of a policy which has a significantly negative impact on the earnings of operating renewables assets raises our perception of regulatory risk.”

However, Moody’s believes the Contracts for Difference scheme would help reduce risks for green projects as it will lower exposure to the wholesale power price and provide contractual protection against the impact of certain changes.

It added: "Other policy changes have in recent years resulted in a sharp increase in development phase risk, while investments in operating assets and most in construction have largely been protected. The introduction in 2014 of competitive allocation for the new Contract for Difference (CfD) support scheme, the early removal of eligibility for the older RO scheme for onshore wind and solar PV, and the removal of pre-accreditation for the small scale feed-in tariff (ssFIT), all increase the risk that new projects will receive a lower support rate."


Written by

Bruna Pinhoni

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