The UK has risen two places to third in EY’s biannual global ranking of the best places to invest in renewable energy.
Positive developments highlighted by the firm included the launch of the government’s new energy security strategy and the awarding of seabed right for tens of gigawatts of generation capacity in the recent ScotWind leasing round.
With an overall score of 70.2, the 59th Renewable Energy Country Attractiveness Index placed the UK behind the US in first (74.2) and China in second (71.4) but ahead of both Germany in fourth (69.6) and France in fifth (69.5).
The UK once again received the top mark for offshore wind of 62.7, compared to the US in second with 60.2, and also performed strongly on onshore wind, receiving the second highest score of 58.7 and falling only marginally behind the US with a score of 58.8.
It additional received the second highest scores for marine energy and biomass, with scores 36.3 and 56.3. France took the top spot for marine energy, with a score of 38.9, whilst Japan was rated best biomass investment, with a score of 56.9.
The UK received less noteworthy scores for investment in solar, hydro and geothermal energy.
Top Ten
Explaining the UK’s ranking, EY pointed to the results of the T-4 Capacity Market auction in February, which awarded agreements to 1.1GW of de-rated battery storage capacity across 107 projects – a four-fold increase over the previous auction. It said less than 10% of battery units that entered failed to win a contract.
The accountancy firm also drew attention to the results of the ScotWind leasing round, which awarded seabed rights to 17 projects with a total capacity of 24.8GW, including 10 floating wind projects with a combined capacity of 14.6GW. It said the majority of these projects are expected to reach financial close by 2028 and be completed across 2030 and 2031.
It likewise noted the launch of the fourth Contracts for Difference allocation round – the largest to date – which is offering annual subsidies of up to £285 million and is expected to deliver up to 12GW of capacity between 2023 and 2027. The allocation round is the first in more than half a decade to include a pot 1 auction for more mature technologies such as onshore wind and solar. In February, the government announced that rounds would henceforth be held annually and would all include pot 1 auctions.
EY also praised the government’s energy security strategy released last month, which it said “illustrates the diversified approach required to improve energy security” in the face of the current crisis.
Ben Warren, RECAI chief editor and corporate finance leader for EY Global Power & Utilities, said: “As governments seek to diverge away from natural gas, added impetus is given to renewable energy technologies that can help to diversify the renewable energy mix.
“This sets the tone for a significant domino-effect in the investment landscape, with a re-prioritization of renewable energy build out creating an attractive climate for investment, with growing amounts of capital to deploy.”
EY Global Renewables leader Arnaud de Giovanni said: “Many renewables technologies that were considered new and high-risk in the recent past are fast showing the potential to become mainstream and are therefore attracting investment interest.
“With energy prices expected to remain volatile for the foreseeable future, energy leaders have an unprecedented window of opportunity to leverage technological innovation and explore investment in enabling sustainable, renewable growth.”